Transcript

RICHARD N. HAASS: Okay, why don't we get started. This is the third movement of the Iran concerto. I'm not sure it'll be allegro -- (laughter) -- but we will, we will see. With us are two of the leading thinkers -- just about anywhere, on the subject of Iran and U.S. policy toward Iran. We are fortunate to have them associated with the Council. We are fortunate to have them with us today -- Vali Nasr, Ray Takeyh. They need no introduction and, as a result, they will get none. (Laughter.)

The first session was on Iran's internal; and the second session, as you know, was on their nuclear programs, and all that. And when we get to the Q&A, I wouldn't be surprised if we returned to some of it -- obviously, there were questions on the Israeli angle, and all that.

But, what I really want to focus on in this last session is U.S. policy toward Iran, because early on in the new administration I would think that one of the first interagency processes of the 44th president will be to test this -- will look at the full range of our U.S. interest concerns, what have you, vis-a-vis Iran; and they will, basically say, do we want to change what we've been doing? If so, to what degree?

But if this were such a drill, or if this were a Council task, the first thing we'd want to do is at least make sure we understood what exactly was U.S. policy towards Iran. So, what I'd like to do is make that the first question, because it's -- I was part of the process for several years of trying to shape it, and so I know a little bit about it.

I wouldn't exaggerate what I know. But, let's just sort of posit what U.S. policy is before we then assess it; before we discuss ways we might change it.

So, Ray, How would you describe, now, U.S. policy?

RAY TAKEYH: Well, I would describe it as two policies. For some reason I don't think there was one. There's actually two. (Laughter)

First of all, there is what happens outside the region, and this has to be through a series of Security Council resolutions that, in and of themselves, don't have substantial coercive power. But they're supposed to convey to the Iranians a measure of international consensus and solidarity against a nuclear infractions, which establishes the basis for informal sanctions that have been inactive, outside the U.N., in cooperation between United --

HAASS: Can I just interrupt? I'm going to be really rude for a second. Before we start talking about the instruments of the policy, what do you think are the goals of U.S. policy towards Iran?

TAKEYH: I think, at this particular point, is to restrain Iranian power, constrain the nuclear program. But those are rather an amorphous aspect of this policy, so there's not that clear pronunciation of it.

And the instruments are, as I've said, they take place outside and within the region, trying to mobilize a regional consensus against expressions of Iranian power.

HAASS: That sounds then -- if the purpose of it is to put a ceiling on the nuclear enterprise, and to constrain or limit the spread of Iranian influence as a result of Iraq, that sounds a little bit like containment.

TAKEYH: Yeah. On the nuclear issue, I would suspect they would want Iraq to have no measurable enrichment capabilities, yeah. So, that's not restrained, that's --

HAASS: That's actually more than that.

TAKEYH: Yeah.

HAASS: That's actually a bit of roll-back in the nuclear area; and containment, if you will, in terms of -- would you buy that?

VALI NASR: I think actually it's rolled back everywhere. It's maybe only very recently that the administration has tried to calibrate its capability, vis-a-vis its goals, and it may have backed off to just try to constrain Iran. But the U.S. wants Iran out of Lebanon; wants it -- not only not come into the Arab-Israeli process, but eliminate all of its influence there.

The U.S. goal for much of the Iraq war was that the Iranians should leave. In fact, that probably was the tenor of the discussions between the U.S. and Iranian ambassadors. And, similarly, in Afghanistan, they quickly, after 2002 -- particularly after the Iraq war, the U.S. also wanted Iran out of Afghanistan as well. I would say -- (inaudible) -- sort of, a frame, is that for much of the past five years the U.S. has wished to go back to 2002. In other words, roll things back to before the Iraq war, as if the Iraq war didn't happen. Put Iran back in its cage; lock the door; and then hope that the regime would fall down. And then also take away their nuclear capability as well.

HAASS: Okay, so if one were going to posit that as the policy -- at the risk of asking a question to which I sense I know the answer, how well is it working? (Laughter.)

NASR: Well, I think -- if I may go first, I think that the main problem is that it was a completely unrealistic policy to begin with. It's a policy of maximal goals with minimal means. And the more -- very quickly, we overreached to a point that even the credibility of getting some modest results began to falter.

And we became very focused, if you would, on whether we were progressing on the nuclear issue -- whether the Europeans and the Russians were helping, et cetera, but in reality, we never managed to change Iran's position in Lebanon. In fact, after 2006, they became much more important

The Annapolis conference failed to eliminate Iran's role in the Arab-Israeli process. In fact, Iran now holds a lot of the cards, at least in the Arab domain. We never were able to force Iran out of Iraq. We've made some gains because of the new stability post-surge, but Iran is not gone. And, similarly, in Afghanistan Iran's presence is there.

And, in fact, the idea of even trying to build a united Arab front that is willing not to deal with Iran -- a Dubai that is willing to cut banking with Iran, a Saudi Arabia that's willing to cut ties with Iran -- none of that has worked. So I think, in some ways, I think the -- the first thing the interagency process has to do is exactly to, sort of, back away and calibrate 'what are our goals, with what are our means?'

HAASS: I assume you're not going to say the policy has been strikingly successful?

TAKEYH: The problem is there's -- as he was saying, there's no regional consensus on Iran. There has never been an Arab consensus on Iran. There was no Arab consensus on Iran during the war -- I mean, you know, Qatar was dealing with them, and so forth. So, attempting to craft a sort of a regional consensus, similar to the one that was done with the Soviet Union during the Cold War, is just impractical.

That has to do something with the way the U.S. allies in the Gulf behave, and so forth. And then we had tried to balance, and hedge, and so on and so forth, as opposed to take unequivocal sides.

HAASS: So, yeah, just to interrupt, to just -- a little bit of a detour; I didn't want to go here yet, but let me just do it. So, when people talk about the idea of Iran, in a kind of anti-Iranian -- to some extent, anti-Shiite, but more anti-Iranian power projection glue to U.S. policy in the region, animating everything from what we used to call "the peace process," to everything else, you'd basically think that's a nonstarter?

TAKEYH: I think it's possible to limit Iran's influence in the Arab East, in the Palestinian-Israeli-Lebanese context. If you have a successful peace process and some sort of mediation diplomacy, it is possible to eliminate the ingredients that lead to Iran to project its influence there. It's possible for Iran not to be a Mediterranean power, but I don't know if it's possible to make sure that Iran is not a Gulf power.

NASR: If I may add to that, I think the Iranians have calculated correctly that the peace process will not go forward sufficiently to really change the dynamic in the Arab world. And, in fact, the U.S. made a big mistake trying to hang its Iran policy on success of the Annapolis conference, and success of the Arab-Israeli issue.

Secondly, I think the Iranians have found out that this anti-Israeli, anti-Holocaust rhetoric plays really well on the Arab street, and it's the best way of blunting the anti-Iranian sentiment on the ground level.

And, thirdly, I think the Arab governments, particularly after 2006 and the NIE report, don't trust -- it's not that they don't trust our policy, they don't trust our competence. They don't think -- they don't want to bet their future, and the future of their relationship with Iran, on an administration who they don't trust can formulate an -- (inaudible) -- policy.

So, they're hedging their bets. It's not that they don't want to contain Iran, it's not that they're favorable to Iran, it's just that they don't trust that we're able to get what we want.

HAASS: Given what we heard in the first session this morning, to what extent should regime change play a part in U.S. policy? Or, ought this to, essentially, be jettisoned either because it's not going to succeed, or it gets in the way of what limited cooperation there could be in other realms?

TAKEYH: I'm not quite sure if there is -- if the problems that United States is experiencing with Iran are subject, or susceptible, to easy diplomatic solutions. Therefore, I think to make the U.S. policy one of -- sort of, ostentaciously a change of the regime, it defeats the purpose of any diplomacy.

However, I would actually differentiate between changing regime, democratization and human rights. I think any sort of a negotiation with Iran should have a human rights component to it, as was the case with the Soviet Union with the Helsinki process.

In that particular sense, what you say to Iran is 'You want to be part of the international community, there are certain norms of behavior that you have to concede to. One is civil society, activities, and so on and so forth; monitoring behavior of your human rights abuses.' I would think that's an important part of an equation to have -- and then sort of a negotiated settlement. For no other reason than it would drive them crazy, because they would object to that because of interference with their domestic affairs, and so on.

But, I don't believe that the United States can have negotiations with Iran without taking into consideration the character of the regime. That's different than the change of regime.

HAASS: But if the United States did that, two questions: Imagine we did that publicly. One, how would that play inside Iran? Second of all, would that cause problems in the region, because we would be holding Iran to some standards we, perhaps, couldn't hold some of our Arab friends to?

TAKEYH: Well, I mean, those human rights discussions take place with other countries as well. It's part of the negotiations we have with Egypt, the Saudis, and so on; and the Europeans who have just negotiated with Iran -- far more successfully than we have, have made human rights a part of the dialogue with the Iranians. And they have actually made some head-ways with that -- inspection of Iranian prisons, demanding the end of certain torture practices, and so forth.

The Europeans, who get sort of a blame for being mercantile and amoral, have actually been far more effective in pressing the human rights with the Iranians than the United States ever has. And in any negotiations that the United States has contemplated, human rights weren't part of it.

A lot of the conversation assumes that the United States and Iran approach things adversarially; there's a -- please turn off your cell phones -- antithetically, that there's no overlap. Let's challenge that for a second, because I was involved in some of the exchanges between the United States and Iran in Afghanistan. And actually there was some limited common cause.

And when I look at the situation in Iraq, for all of the differences between us, I also see that neither of us should oppose a -- more positive, neither of us want to see a country that hemorrhages; neither of us wants to see a country that fails. The United States favored elections. Those elections happened to bring Shiite politicians to power. I would assume, sitting in downtown Tehran, that was not an outcome that they had real problems with.

So, when one looks around the region, are there areas where the United States and Iran can and should cooperate?

NASR: I think, you know, what you say is very important in the sense that even if these areas of common interest are short-run, they provide the trust-building first steps that you would need in order to get to somewhere better with the Iranians. I think Iraq still is a place where Iran and the United States, by and large, are -- by and large, I would say, are on the same page, because they're both supporting the same government.

The Iranians are also hedging their bets, within the Shiite community, by supporting the Sadrists, et cetera. But the Iranians --

HAASS: Have they reduced that support recently?

NASR: Well, they don't have an option, because the Sadrists have been clearly downsized significantly. And that provides an opening. In other words, the only game in town for the Iranians, realistically, is the Iraqi government. It's the government that we're also banking on. Both the Iranians and the United States would want the Maliki government, or some version of it under a different leader, to succeed.

Our interests are the same as Iran in Northern Iraq, about which we don't talk. In other words, the stability of the Talabani-Barzani regime, and their -- and at least some kind of a agreement about the shape of Northern Iraq that would be conducive to Iranian interests.

Around the corner, when the next administration comes out, the big issue would be the Taliban. And Iran was the one country in this region that supported the Northern Alliance, along with India, as you know, against the fight with the Taliban. Again, a strategy of dealing with Afghanistan's stability -- working with the Karzai government, dealing with the drug issue, invariably, Iran and the United States are going to find their points of common interest.

And the third issue is the whole issue of the Caucasus, energy, gas pipelines and Russia. In other words, the way the United States is beginning to think about that region -- namely, how to create energy independence for Europe from Russia, cannot work without Iranian cooperation and participation. And, so you know we may not have enough to think of a fruitful, long-run relationship, but we have enough to at least begin to think of a different kind of engagement.

TAKEYH: The issue of Afghanistan is a peculiarity, because Iranian-American interests in Afghanistan have always coincided, since 1979. And they have never led to a larger cooperation between the two states. They cooperated -- they had the same objective in expelling the Soviet Union in the 1980s, preventing the consolidation of power by Taliban in the 1990s, and the displacement of Taliban in 2001-2003 period. That has never led to a larger cooperation between the two countries. That's one of the diplomatic peculiarities of Afghanistan-Iran-U.S. nexus.

On issue of Iraq, there's a larger agreement between the two powers preventing Iraq from being territorially dismembered; having a diplomatic process -- democratic process that leads to a rise of the (Shiites ?). But between that, and below that, there's all disagreements. Iranians want American forces out of Iraq -- not as precipitously, but out of Iraq. Iranian goal of emerging as preeminent power in the Gulf cannot be sustained so long as there's a sizeable contingent of American forces in the Gulf, whatever their preoccupation.

The relationship with the Sadrist movement is changing. They have a relationship now directly with the militias, or the breakaway militias, special groups, whatever they're called. So there is some degree of disagreement and friction at the ground level, which tends to undermine the larger conceptual agreement between the two powers and the direction -- overall direction that Iraq should go.

HAASS: Has there been, though -- or has there not been some backsliding, if that's the word, between -- involving Iran and the Taliban? My own sense is, whereas in the past the Iranians were quite -- if not unalterable opposed, overwhelmingly opposed to the Taliban, one gets the sense that, somewhat cynically, they've decided the Taliban are a useful instrument?

TAKEYH: Yeah. Sufficiently empowered, but not dramatically so, they can be used as an instrument of inflicting pressure on the United States.

NASR: But I also think that the Iranians are also hedging their bets with the Taliban. I mean, it's the saying that, you know, Ahmed Rashid used to -- liked to say that every shopkeeper in Kabul believes the Taliban are winning. I think the Iranians don't want to end up in the same situation with the Taliban as they were in 1997-98.

It's -- the best time now is to buy their friendship, so you don't have to see the short end of the stick when they arrive in Kabul. Which I think, again, goes back to not just our friends, but also even Iran. There is a belief in that region the U.S. is incapable, essentially, of seeing its policies to fruition. And that allows people, or pushes people to hedge against us, which is not very useful.

HAASS: Which tends to be self-fulfilling.

What is current Iranian thinking vis-a-vis terrorism as an instrument? And has there been any evolution or change?

TAKEYH: Iranian terrorism, it's customary to suggest Iran is the most ardent supporter of terrorism. But, if you look at their terrorism portfolio over the years, it actually has shrank. Part of the Iranian terrorism portfolio was assassination of dissidents abroad. That has stopped. Now, maybe that's because there's not that many dissidents left abroad -- (laughter) -- but still, that has stopped.

So their principal expressions of terrorism, as we call it, would be a support Hezbollah, would be support of Hamas, and whatever they're doing within Iraq. Within that, I think their relationship with Hezbollah is so organic, and is so fundamental to the character, and identity and foreign policy of the country that I don't see that changing. Hamas may be a little different.

HAASS: Why is that -- for a second?

TAKEYH: Hezbollah -- Iranian -- the relationship between the Iranian Shi'a community -- clerical community, and Lebanese Shi'a community, actually predates the revolution. Their relationship that has been mended through seminaries, consolidated through marriage, and Hezbollah has emerged as a successful protege of Iran, particularly in the aftermath of the 2006 war. So, in that particular sense, Hezbollah gives Iran a reach into the Arab piece.

HAASS: Why, when we talk about the Israeli-Palestinian process, or Lebanon, and so forth, why are we talking about Iran? It has no borders. It has no ability to project power in that region. It's because it has these proxies, particularly in terms of Hezbollah, that it can gain it.

Second of all, Hezbollah --

HAASS: Just so I understand, though. When the Iranians deal with proxies such as Hezbollah, is that then because they are seen as useful instruments of projecting and expanding Iranian power? Or is it seen more, because of the Shiite dimension -- it almost reminds me of the debate we used to have about Soviet power versus the spread of communism.

TAKEYH: The reason why that relationship is so important is because it's a marriage of strategy and values. It serves both ideology and tactics. But also, Hezbollah allows Iran to leapfrog over the sectarian divide.

I mean, Vali talks about the, sort of, the rise of Shi'ism, and the Sunni-Shi'a divide. I mean, what is a Sunni-Shi'a divide when Hezbollah flags are flying in Cairo? So it gives you an appeal, to a larger Arab public -- "the street" that he's talking about.

NASR: If I may recite an anecdote. In the morning Ali Ansari was talking about the growth of hand-kissing in Iran. Hand-kissing began with Hassan Nasrallah kissing Khamenei's hand. He's the only Shi'a leader around the world who actually kisses Khamenei's hand. So, that has value too, you know. (Laughter)

HAASS: Hard to quantify. (Laughter.)

There's lots of people that think -- or some people think that, whereas Israeli-Palestinian talks are, shall we say, problematic in the extreme -- for a whole raft of reasons, including the weakness and divisions on the Palestinian side, but Israeli-Syrian talks have slightly better prospects. Would Iran try to stop that when -- and could they? Imagine you did have a situation where the next Israeli government was prepared to try to strike a peace deal with Syria, and Assad was as well. How would Iran approach that?

NASR: Well, I mean, so far the Iranians have not been favorable to the talks, and have publicly criticized Syria. And I think the main sign of the breach is the assassination of the Hezbollah terrorist Imad Mughniyeh, which both Hezbollah and Iran believe was the olive branch that the Syrian intelligence gave to Israel as a sign of goodwill. There's a lot of bitterness about that.

But the Iranians probably figure that it's going to be awhile before there is a peace treaty. And for Iran, I think everything right now is about the next quarter, not the next quarter century. And, you know, the Israelis probably -- they have elections, they're not likely to give enough to Syria to seal the deal.

Iran also has enormous amount of direct foreign investment in Syria. Some say upwards of $8 billion have been invested in Syria. You have a lot of common ground in Lebanon. Syria cannot manage Hezbollah without Iranian help. Israel cannot turn Syria on a dime. At best, you know, the idea of a peace treaty between Israel and Syria is a backing away from war, and probably a, sort of, a cold peace between them.

But even that, I think the Iranians think is not in the immediate future. So, they don't see the real strategic map of this region changing dramatically -- say, in the next six to eight months, which is really critical for them in terms of whether or not they're going to be somewhere else with the United States.

HAASS: Only in the Middle East is facilitating an assassination seen as a sign of goodwill. (Laughter.) But, I will let you all ponder that for some time.

Okay, so you have a new administration in Washington in place. It's the spring of 2009. People at the senior level have been confirmed. Some of the initial reviews have been launched. And when one looks at the question of U.S. policy toward Iran, for a second, what is the relationship between our previous session -- the emphasis on nuclear, and everything else, to what extent does that -- should that dominate?

And even beyond that, to what extent should the United States try to impose linkage in its relationship with Iran? Or should it basically say, every boat on its own bottom. If we can make progress in the nuclear, great, and if we can't make progress, at the same time, on terrorism, so be it. How should the United States approach its relationship with Iran?

TAKEYH: I mean, Ash touched on this in the previous session. I think when you were talking about limited negotiations over arms controls issues, or larger negotiations where arms control would be a component of a larger context between the two countries, I suspect, that's the best way of approaching it, because I think there is a conceptual divide between Iran and the United States on the nuclear issue.

And Iran and the international community on the nuclear issue. Iranians look at negotiations as a means of offering confidence-building measures so they can proceed with a nuclear program. The United States looks at negotiations as a means of stopping their nuclear program. So, that conceptual divide, I don't know how it's going to be bridged.

But perhaps in the larger context of negotiations between the two countries that deal with stability of Iraq -- Gulf security, diplomatic and economic sanctions, frozen assets, Hezbollah, and so forth, maybe you can make some progress. Now, if all these issues are linked, then that's the formula for paralysis.

HAASS: But just so -- but just so I understand, does that mean the United States has two baskets of sanctions? One is a basket of sanctions we'd either raise or lower, depending upon the nuclear issue; and the other is a basket of sanctions we keep in reserve for everything else?

TAKEYH: No, I'm not suggesting that. What you're trying to do -- essentially, some of those sanctions will have to be modified over time anyways.

One of the easiest things the United States to do is to deal with the frozen assets issue, which would be, symbolically, even very powerful; the diplomatic recognition issues, or moving towards establishment of diplomatic recognition. But that's the complexity of these negotiations, is how much of your grievances with Iran are you willing to live we?

At the end of negotiations, you should be prepared to enter a period of ambiguity, where none of these issues are resolved conclusively to anybody's satisfaction. How much of a Iranian nuclear program can you live with? How much of Iranian influence are you willing to concede in Lebanon? How much of an Iranian presence is acceptable in Iraq?

And if the answer to all those questions is "none of the above," then I wouldn't actually suggest negotiations, because then you're trying to get to negotiations what you couldn't get through containment and coercion.

NASR: I would not disagree with Ray, but I would think that with a new administration there is a framework problem, in a number of ways. One is that we have an Iran problem, and we see it essentially just as a nuclear problem. Every discussion begins and ends about, 'what are we going to do with that.'

But I think it's a much bigger problem. And I think it's -- I went back to your introduction this morning, that it's not possible for us to get the greater Middle East right unless we properly understand the role of Iran in the region. Then, you know, we have to sort of approach this thing completely differently.

And I think the Iranians look at it this way; in other words, the nuclear issue, for them, is a lever to changing their whole status in the region. I think one of their strategists said that either this issue will solve absolutely everything between the United States and Iran, or there's no point even talking about it.

And I think, you know, it might be the case that it's too late. That, for so long, the United States has made this only about suspending enrichment and ending the program; that we, sort of, have gone so far down this road it's very difficult to come back from. But unless we find a way to broaden the Iran issue, in the context of our understanding what's happening in that region, I think we're not going to get it right.

HAASS: But, let me just sort of, play that out for you, just so I understand. If you thought of the U.S.-Iranian negotiation as one of, for want of a better word, "multiple baskets" -- you have a basket called "nuclear," you have a basket called "human rights inside Iran," you had a basket called "Iraq," one called "Afghanistan," one called "Lebanon," one called "Hamas," whatever, "Hezbollah," "terrorism." If you had 10 baskets from, you know -- and maybe "assets," and some of the baggage, if you will, left over from the last three decades.

Imagine you started talks on the nuclear, and couldn't make any progress there. Do we deny ourselves leverage? Is that the right way to think about it, if we still go ahead on the other baskets as best we can? How is it we ought to structure these talks, because it seems to me we have to think about leverage; we've got to think about priorities; we've got to think about what might influence Iranian behavior, more so before we do something about flying out assets.

What do we link? The flowing out of assets? Or do we simply say, here, have it. We're going to flow out some assets in the hopes that, therefore, you reciprocate? How do we structure? How do we think about this?

NASR: Well, you know the way it's been figured is that the nuclear issue is on the forefront. First of all, it's been there; secondly, because there is a very tight timeline attached to it. You want the Iranians -- if we can intervene in the program before they get too far ahead, as both Ash and Gary mentioned.

But I think, you know, the idea of talking with the Iranians about everything at the same time may not be the best approach, right. I mean, they might have to sequence it. There are things that we are closer with, and it's possible to get at least a certain modicum of agreement on faster, and build trust that then would be parlayed into the --

HAASS: For example, what do you see as some the lower hanging fruit?

NASR: I would say still Iraq, Afghanistan and the Caucasus as probably lowest hanging fruits. I mean, it's possible for us to have a different kind of a discussion on Iraq. I don't think we've been talking to Iran in Iraq at all. The two ambassadors meet to give each other demarches. You know, a list --

HAASS: They're not even meeting.

NASR: -- they don't meet anymore at all. But there isn't -- there is no fruitful engagement of looking at what are each other's interests, and how they can have a constructive view of supporting the same goal in Iraq.

We could have a similar kind of a framework about Afghanistan. We actually had it. Not only at the Bonn conference, but actually for the one year or so after Ambassador Khalilzad was in Baghdad he would meet with his Iranian counterpart and it wasn't worth beans. And they got a lot of things done before they went to Loya Jirga.

One of the dilemmas we have is that, actually, the most difficult issues, that we are farthest apart, are the ones that are on the forefront of the Publican (ph) and the policymakers in the United States. And they completely overshadow where we could actually be gaining things.

And I think, you know, we also have to have a long-run game plan. I mean, is the aim only to mitigate Iran's worst behaviors in multiple arenas, and then leave it alone? Or, do we have -- as it was the case with China, a grander strategy of bringing Iran in from the cold? But if our aim is really to -- is not just fixing one, two, three, four things, but really changing the profile of that country, then I think we need to think about the sequence of things that get us there a bit faster.

HAASS: Do you think what you were describing -- to use my language -- I'd say integrating Iran?

NASR: Exactly.

HAASS: Is that -- what's your sense of it? Is that a pipe dream? Do you think that's a real option? Are you thinking in terms of years, decades, generations? And if you are thinking about it, is there a sequence that you would say here's how to do it or how not to do it? I mean, is this a -- I mean, because it was the U.S. policy, in some ways, towards China. There's been elements of it towards the old Soviet Union, to some extent with Russia. Is this a realistic option, given the nature of the Iranian regime and its own foreign policy goals?

NASR: I think it's a difficult process and it's not going to be quick, but I think at least beginning the process and setting the mechanisms in place is not that unrealistic. And I think, in fact, if anything the sanctions are probably the single biggest negative here, because closing Iran to the world economy, reducing the leverage that Europeans, Americans have within Iran, reducing relationships between Western and even regional business communities with the areas in Iranian government, civil society, business community that would be supportive of that change is not actually beneficial.

So I think a policy of isolating Iran is not going to help integration. In fact, one of the most important outcomes of the sanctions has been a much more aggressive turning towards China within varieties of economic sectors in Iran. And that only will in the long run make this much more difficult.

Iran is deeply integrated into the Middle East structure. It has security projections all over the place. Its trade with Europe has gone up -- 17 percent with Italy, 30 percent in France, Germany. The only country whose trade has declined with Iran in European countries is actually Britain.

The level of trade with China and Russia is deeply increasing. I don't know what -- the United States -- does the United States have a key to Iranian integration in the era of global economies? So Iran is not a country that's isolated like North Korea is. I mean, you can't a bank loan from UBS, but they seem to be doing okay nevertheless.

So it's important to recognize that we might not have the keys to preventing a country whose principal export is a commodity that international economy desires and relies on can be integrated or disaggregated from the international community at our will. That is not potentially a leverage that we possess.

The leverage that we possess is having an understanding of the Iranian government that has, in my view, re-conceptualized its national interests. It doesn't even use national interests as necessary economic gain, but security advantage. It's a security driven -- its principal goal is to increase its power and influence in the Middle East. And that is potentially a leverage that you possess in terms of integration of Iran into a security structure of the Middle East.

HAASS: Well, let me just press you on that. What is the --

TAKEYH: Please don't! (Laughter.) I don't understand you, really.

HAASS: Since you don't understand what I mean, I don't understand what you mean. And one of the interesting things you've got to do in diplomacy is figure out not just how much things matter to you, but the value you believe they have for the other side. And usually in negotiations, the marketplaces are not equal.

TAKEYH: Yeah.

HAASS: There's a dis-equilibrium between, if you will, between the two marketplaces.

So what is it that Iran would value most? Is it, for example, some sort of an American security insurance -- conditionalized it might be. What is it the Iranians are looking for -- or is it the assets, is it diplomatic?

If they were having this conversation, how would they structure their list and what is it that they care most about from us?

TAKEYH: I don't believe they're looking for security assurances. As a matter of fact, they openly scoff at the idea of security assurances. No country predicates its security on assurance of its adversary. France and Britain achieved independent nuclear capability irrespective of security assurance from an allied country. Nobody bought the idea that we'll put New York at risk to save Berlin.

So if an ally country doesn't believe in that, how do two countries with deep-seated --

HAASS: Actually, the Soviets did, but that's okay.

MR. TAKYEH: So how did that affect countries which are adversarial to one another? So let's put that aside.

Security assurances is different from a security dialogue between the two countries. I would say, at this point, there's a debate within Iranian security establishment, as I understand it. And the debate on one side are those who believe that Iranian preeminence in the region can only come about as a result of confrontation with the United States. It's a prize to be achieved through confrontation and defiance and what they call confrontational diplomacy.

And then there are those who essentially actually subscribe to Shah's ideology, that the only way Iran can become a leading power in the Gulf is through a different relationship with the United States. That American power might be declining, but they can still be a potential barrier to Iranian resurgence. That is the debate.

Now, the way you impact this particular debate is for the United States to become more active diplomatically. It may not work, but I think that's where it -- that's where I would situate the debate.

NASR: I agree. And I think you can also partially, for sure, what price -- what is the value of what Iran has gained since 2003 to the regime and this issue of security. I think, you know, ultimately the only assurance we can give in security is an American embassy in Tehran.

HAASS: So they can take it over! (Laughter.)

NASR: No, I mean -- but in reality, in other words, the security assurance will not come in terms of any kind of a guarantee. It means when you have a relationship with another country, you would feel more secure than when you don't.

So I think, you know, that's why exactly that's where Iran ultimately could give up the nuclear power. It's not a matter of just a few carrots and a few sticks. It wants a completely different kind of relationship with the United States.

Secondly, I do think there is a lot of value to what Iran has gained in this region for it -- whether or not it intended to make these gains; whether or not it's the U.S.'s fault -- but Iran is staking a lot of its political capital in the region and domestically on maintaining its position in Iraq, in Afghanistan. The entire risk they're running by a very aggressive anti-Israeli policy in order to pacify the Arab world or to have Ahmadinejad the number one in a poll by Al-Ahram in Cairo.

These all suggest that they look at this very -- as something they want to keep. And you can see it even among the most pragmatics in Iran would say, look, the only country that's ever invaded Iran is Iraq. And the only aggressive attack against Iran in modern times has come from that neighbor. Iran has to be in Iraq in order to protect itself. The defense of Iran begins in a forward position in Basra, in a sense. And therefore, even they are arguing that Iran cannot be excluded from Iraq. It wants to maintain that position.

So I think, you know, if there was absolutely successful negotiations between Iran and the United States and they really solve all the problems, I think where I would differ with the Bush administration -- the Bush administration thought that the result would look like 2002 and Iran would agree to leave Lebanon/Palestinian issues, Iran and Afghanistan.

I think if we're really successful, the result would be a recognition of Iran's position in this region, that they will be invited to the next Palestinian conference; they will have a say in who's going to be the president of Lebanon; they will -- you know, one of the reasons they want us to leave the region is because that's part of this reality -- that they will actually have a say in the future of Iraq, formerly, and also of Afghanistan. That they will look a lot more like the Brazil or the China or the India of this region than merely one of the 20-some countries in the Middle East.

So I think that's something to negotiate with them.

HAASS: What'd be in it for us, then?

NASR: Well, what would be in it for us is the facts -- we've begun this discussion by believing that the fact of Iranian power is something bad. Iranian power in this region is not bad in and of itself. It's only bad if it's working against us. In other words, we didn't have a problem with the shah owning the Persian Gulf when we didn't have a problem with the shah.

Our position's very different from the Arab world. The Arab world really doesn't care about the Iranian regime. It cares about Iran. It's inherently anti-Iran. It would have a problem with a democratic Iran asserting hegemony; it would have a problem with an Islamic republic asserting hegemony.

I think if the United States can arrive -- the end result of this discussion would be that the United States ends up getting many things that it wants; that Iran's presence in this region would not be disruptive; that if it gets a role in Lebanon and Palestinian issues and Iraq and Afghanistan, it wouldn't be standing out there throwing stones; that it will not destabilize governments around it; it would not support subversive regimes; it will not promote and export revolution. And potentially, even, it will sort of solve the security functions around the Persian Gulf so we won't have to have 180,000 troops and two aircraft carriers for an indefinite time period in order to deal with this region.

I mean, the main gain for us is reducing a very expensive and undesirable security footprint in the region. And also being able to bring Iran from where it now to a different base. The price for it is the price of a much more influential Iran. Now, the dilemma we have is that the Arabs won't go along go with this.

HAASS: To say then on your statement -- to deconstruct, though, what you said, which is in some ways accepting -- I don't know if the word is the institutionalization of Iranian power -- something along those lines -- implicit in that, to use Kissinger's writing about Germany in a very different context in the late 19th century, that Iran is conceivably not a revolutionary power; otherwise, why would we want in any accept it or institutionalize it? And that any conversation with Iran cannot be narrowly nuclear only.

But implicit in what you're saying, it seems to me, is an Iran -- the project of Iranian power is not only bad; and second of all -- indeed, to some extent could be good; and secondly, we are looking, if not a grand bargain, at least at a very broad conversation with Iran.

NASR: Exactly. I mean, Iran -- I agree with Ray. Iran can go down different roads. It can go around the road of Japan of 1930 or it can go around the road, which is much more constructive: the road of India. And I know even we had this discussion that, you know, if Iran goes with -- gets the capability, even short of ever using it, it can become a far more aggressive country.

That, I think, is a very distinct possibility. But it's also possible that Iran may behave a lot more like India after it got the bomb. It relaxed; it began to turn its attention to other things. And the key question is that some of these issues are fluid at this point in time. And I think Ray's absolutely right that these debates within Iran are very -- are ongoing. And part of the whole use of aggressive diplomacy by the United States should be to try to somehow interject ourselves in that debate, to have a say in which direction Iran would lead.

HAASS: Let me sort of ask, then, one last question to get operational for a second.

As I listen to you then, one of the outcomes of the inter-agents review about what happened in the spring 2009, I would assume would be that you would want to see is quite possibly a more active American diplomacy with Iran, even an Iran coordinator or envoy, but one who had a very large set of issues in his or her pocket -- not a nuclear-only envoy, but essentially a nuclear-plus envoy that would be free to raise virtually any bilateral or regional or even global issue. So is that about right?

TAKEYH: Currently, that's only the political directors for Europeans and Iranians. So it comes, you know, technically it comes to that office. So if you want to begin with an envoy, you have to disturb that configuration.

What Vali was trying to suggest is can you -- and I don't know the answer to that -- can you concede to an Iranian hegemony and turn it into a force with begin power, which essentially was the U.S. policy during the shah of Iran? Was that right, to some extent?

HAASS: Why would it have to be hegemony? Why couldn't it simply be significant Iranian influence? Hegemony -- the idea that the United State would concede hegemony over this, by the way, seems to me a nonstarter. It may not, however, be possible to exclude Iranian power.

So the real question is on what terms should the United States be prepared to countenance Iranian power?

MR. TAKYEH: There's a differentiation I would make between different parts of the lease, is the policy can probably work in terms of having greater cooperation or security issues in the Gulf and Iraq -- although that comes at the price of intense allied management, but there'd be some Gulf security and Gulf countries that will object to that.

I think in terms of the Arab peace, in terms of the Lebanon and the Palestinian area, our interests are divergent, because the actors that we want to disarm and marginalize -- Hamas and Hezbollah -- are those that Iran sees as necessary for its influence to their power. So I don't know how you bring Iran into a discussion on the Israeli-Palestinian-Lebanese peace process over vociferous objections to begin with of the Israelis. The invitation of Iran to Annapolis would be kind of difficult, given the fact that they came on the heels of a country that held a conference denying the Holocaust.

I mean, that's -- you know, I can see -- in Lebanon -- I can see a discussion between three powers in Lebanon. You know, Iranians had a diplomacy toward Lebanon. They wanted to mediate the civil war in Lebanon in conjunction with the Saudis and two countries objected to that: Syrians and the Americans for different reasons.

(Cross talk.)

NASR: No, let me put it this way: This is why I think the word "hegemony" and the way we look at it, by the way, is very important. The Iranians may want to go in this to protect hegemony, but in a successful negotiation they will come out with something far less. And I think the model is probably India.

I mean, we at some point tacitly accepted that India will be the prima center part of the dominant source in South Asia, and that the United States will stop trying to prop up Pakistan to continue to challenge India's position. And you know, by and large, India's not hegemonizing the region, but it's a recognized fact that, you know, it's the dominant force in the region.

I think, you know, the points that Ray raises are correct, but that's all because we cannot come to these issues without having a framework to begin with. We cannot all of a sudden invite them to Annapolis or begin a discussion with Lebanon when it's not part of an overall framework of where we're going with Iran.

And I think, you know, before getting into -- I mean, the first thing I think in a new administration, if it's serious about such a vision, is not to come up with mechanics. But it has to be sort of a declaration from the stop -- a statement of intent that, you know, that is where American position on the Middle East and American view of Iran is going.

And I think, you know, that's not going to come without having to have serious back channel discussions with Iranians to sound them out; to, you know, to have also elicit, if you would, sense of whether you were going to have a partner in figuring out these negotiations. The negotiations are going to be difficult enough.

HAASS: I would think, for what it's worth, the most you're going to get is a statement that indicated American conditional readiness -- emphasis on the word "conditional" -- to accept certain projections of Iranian power, dependent upon how Iran were to exercise that power, whether we saw it as constructive or destructive.

And I think the biggest intellectual question for the new administration won't be mechanical. It will be conceptual, as it always is, which deal a lot with the question of linkage and to what extent the United States is prepared to disaggregate, if you will, the Iranian challenge; or to what extent, in particular, we would require that the nuclear issue be settled as a -- I don't want to say precondition, but as a necessary element of a larger relationship.

Put another way, whether it's possible to conceive of a better U.S.-Iran relationship absent satisfactory progress in the nuclear realm.

MR. TAKYEH: Well, you have to define what "settled" means.

HAASS: Well, exactly. And that's, you know, one of the questions and obviously, there's a range of views.

Okay, since we resolved everything, we're going to open it up now. And again, this is the last of the sessions, so I think a lot is fair game, whether it's narrowly on what I've been trying to pry these two gentlemen are or not.

Sure, Ken.

QUESTIONER: Thank you.

First of all --

HAASS: Introduce yourself.

QUESTIONER: My name is Kenneth Bialkin.

First of all, I'd like to say this has been a fascinating discussion. I'd like to congratulate you, Richard, for provoking a discussion that has helped many of us focus ourselves on issues that we've been thinking about. Perhaps the discussion has been very helpful in helping us direct our long views and I thank you very much for that.

In listening to the discussion, however -- and you raised the question of interagency review in the next administration to see what the policy toward Iran ought to be -- I'd like to start with the abiding question of do you think the approach to that interagency review would precede from the same basic assumptions, irrespective of which candidate, McCain or Obama, gets elected? Is that review likely to be independent of expressions so far seen at this stage of the campaign by each of the campaigns, or will that review be preordained by policies already in place?

I took it from the debate that both speakers, to a greater or lesser extent, advocate diplomacy, engagement and discussions with Iran on trying to find those areas where you can find a middle ground, while at the same time ignoring their fundamental precept -- namely that it's an Islamic republic; it is run by a theocracy; it is an absolute policy, grounded in certain radical views of the Koran, which is sustained by the forces of terror.

And the present administration --

HAASS: That's -- you've got to --

Q -- takes that view and the present administration would follow the advocacy of the two of you in various forms, with the label of a appeasement.

HAASS: They call it -- (inaudible).

QUESTIONER: I would call it appeasement. (Laughter.) And maybe a different view is proper, but isn't your advocacy of engaging Iran, as though they did not have the fundamental precepts expressed by Ahmadinejad and the supreme leader -- can we afford to ignore those statements and make believe it's business as usual and is that appeasement?

NASR: First of all, I think, you know, even the policy of not talking to our enemies, we already got over that in Iraq. We talk to plenty of people, you know, who are shooting at us and we renamed a lot of the terrorists as sheikhs and they're not on our pay.

Certainly I would say that, you know, the Iranian regime, without a doubt, has an ideological component in it. And in many ways this is not unfamiliar to us. We dealt with the Soviet Union as well in periods in which its leadership -- or with China -- had very, very restricted and ideological views of the world. When the United States engaged China, the Chinese were hardly a moderate leadership then. They had killed millions of their own population in a cultural revolution.

Diplomacy does not mean throwing the towel in with the Iranians. If you looked at the current situation, war doesn't look good. As we saw in the last panel, it may not even get us what we want. It's very clear that in all quarters of the United States, the current situation is unacceptable as well. In other words, that the Iranians would continue to build centrifuges and snub their nose at the United States.

Well, the only alternative really remains is that how can you -- you need to try something that you haven't seriously tried. And I think that diplomacy off the bat has a game-changing quality, because if nothing else, it will throw the Iranian game plan into a tizzy. The Iranians have been operating on the basis of assumption of the past -- on the past six years. That this administration is not serious about talking; it will not talk. There's no point talking to it. And at the same time, it's increasingly toothless. It cannot do anything militarily either.

And if there is a serious engagement with Iran, which doesn't mean giving in, but is a serious engagement, the Iranians would have to calculate things differently. I mean, there are voices in Iran which often say, you know, put something on the table that will create a breach between the Iran people and its regime; put a deal on the table that would actually much more open up the debate that Ray talked about.

None of that we have tried. I mean, we have not really seriously contemplated what uses diplomacy can have for all purposes -- not to please the Iranians, but to get suspension, to get to getting a change of behavior in arenas that matter to us.

HAASS: We've got lots -- Ambassador Murphy.

QUESTIONER: I'm wondering what do you believe has survived of Ayatollah Khomeini's interest in Islamic world leadership? And what the present leader -- what priority the present leaders give to the Shi'ite-Sunni rivalries, and in that connection, what has been their reaction to Rafsanjani turning up with King Abdullah in an interfaith conference and hands across the Shi'ite-Sunni divide? How seriously do they take that sort of activity?

MR. TAKYEH: The Iranian policy since 1979 was never to describe themselves as a Shi'a power. It was always an Islamic power. The Iranian model of governance had relevance beyond the Shi'as. It was the Saudis and others that called them Shi'a in order to (ghettoize ?) them, put them in a corner and prevent their influence. So there's always been a more of a pan-Islamic aspiration and that has sustained itself.

I have a different view of the Iranian leadership, maybe than Vali and others do. Mainly, I think the number of people that are involved in actual decision-making has lessened over the years. That's what Ali Ansari was saying this morning. I would differentiate between a governing elite and a political elite. And the governing elite have lessened and there is a lot of political elites.

And what the governing elite brings to power is a combination of ultra-nationalism or what Ali would call vulgar nationalism and still a tinge Islamism. And the Islamism is what defines and actuates your opposition to Israeli-Palestinian accord or leads you to cast aspersions or deny the legitimacy of the state of Israel. So there's an Islamic component that still conditions Iran's international relations. I don't believe the Islamic Republic's international relations can be entirely similar to that of the Shah, which was not necessarily dealing with the religious complexion of its antagonists and so forth.

So it's always going to be a state that is somewhere between pragmatic definition of national interests and revolutionary values and it's always going to have that dispersive component to it, which makes it an infuriating negotiating partner.

HAASS: I've got about a dozen people. So if you'll be succinct, and I'll ask my two colleagues here to be succinct, we'll get as many of you as we can.

Given the picture you've already given us of U.S. interests and U.S. policy, what do you think U.S. policymakers think they will be accomplishing for both an overt Iran democracy fund set of activities and through what are reported to be the covert operations that supposedly secret presidential findings have begun stepping up? To what extent is there something of a "hail Mary" pass to regime change in is? Or is it simply a way of trying to get leverage? To what extent can it be productive or counterproductive?

MR. TAKYEH: You know, I have to confess, I don't know about the covert stuff. I read what I read, unless you have the ethnic -- Iran is an ancient nation whose boundaries are largely intact. It is not an amalgamation of kind of ethnic groups put together by British mpireans. So it's a different country in that sense.

I don't know at this particular point. I mean, Condoleezza Rice has said many time that our policy is not regime change, it's regime behavior. The problem is they don't believe it. And will they believe the successor as easily? This is a political leadership, as Vali was saying, that lives its conspiracies. So to some extent there is a degree of mistrust that they bring to the table which has to do with their own experiences and their own upbringings and their own kind of calculations that are unlikely to be mitigated by American pronouncements.

HAASS: Liz Chatter (ph).

QUESTIONER: (Off mike.)

HAASS: The microphone up front.

QUESTIONER: I was struck by the comparison that you made in terms of the India model. And I would suggest that there were decisive shifts in India's policy, without which a good relationship between India and the United States would not have been possible. And there were really, you know, serious compromises besides structural changes. You know, the collapse of the Soviet Union, rise of China, created very compelling reasons to see certain kinds of convergence.

So I was just wondering where is it that Iran can shift its policies to come some distance to meet the United States to make such a positive -- (inaudible)?

HAASS: And in particular, could it happen with oil at $120 a barrel or would we need to see oil at $80 or $60 a barrel to see the Iranians maybe rethink their worldview?

NASR: Well, I mean, it's useful to talk about India or China, et cetera, as sort of general ways in which we can imagine the future. They're not identical in anyway.

Just as, you know, India began to shift its position requiring economic changes that came after a period of economic downturn, it also had a major change internally when the DJP came to power with a very different idea about foreign policy. And also, you had the collapse of the Soviet Union. There's no doubt that the neighborhood in the Middle East has drastically change. And that in itself has opened certain possibilities. Oil is, obviously, a very important factor.

But I think, you know, thinking about this issue, you have to think that the Iranian leadership looks at everything in a cost-benefit analysis. The problem, I think, is not so much of, you know, whether or not to make a shift, it's that the cost of the very first handshake with the United States is extremely expensive for Iran. It loses all of its position in the Muslim world as the leader of the rejection front; all of the political capital that it has on the Muslim street. And therefore, it evaluates the policy shifts that it makes in light of what it's going to gain as a consequence of what it's going to give up.

And in the mind of that leadership, I think, it's so vested in this entire political capital that it gets from it being the bad boy of the Muslim world and the Middle East, that it has to think that it's going to get something that is very fruitful.

And in fact, going back to that first question, if the United States wants to think, what is the one of the major benefits that it gets from brining Iran into some kind of an engagement, is that it would have a major impact on that aspect of politics in the Muslim world and the role that Iran plays with it.

HAASS: Bob Nisan (sp).

QUESTIONER: In this interagency discussion and back channels and all the rest, and what Ray said, how do you know to whom to go to start this discussion? Who has the power to deliver? If you talk about the political front doesn't and the religious front does, and to whom do you go and how do you start and which backchannels do you go to?

MR. TAKYEH: Javier Solana negotiates regularly with the secretary of Supreme National Security Council, which at this point is Saeed Jalili. He was recently elevated as not just a presidential appointment to that council, but also a representative of the supreme leader. That's a port of call. And he's sort of way out there in terms of his ideology. So that's the port of call.

HAASS: Allan Gerson.

QUESTIONER: Allan Gerson.

You may have answered the question when you talked about the costs that Iran calculates that would be involved in a handshake with the United States, but at the end of the last session there was an intriguing point made for the floor. It was suggested by an individual that watches Iran closely that what the Iranian leadership really wants is recognition by the United States -- or they it's on the top of its list -- and the opening of diplomatic relationships, not withstanding its commitment to confrontational diplomacy in certain quarters.

So my question is how important is it to the Iranians to have recognition by the United States and diplomatic relations; and if it is important, how does U.S policy leverage that?

HAASS: That's almost the opposite of the argument that its less of a cost for the Iranians than it is, if you will, a benefit to have an open dialogue with the United States. Which is it?

NASR: Well, every policy or every decision the Iranians make involve giving up something and gaining something. What they give up is the political capital that they have in the Muslim world in terms of their being the rejection front. And also, if we think even in some of the exercise of Iranian power in the region, it is essentially poised against U.S., Israel and the moderate governments.

Now, the benefit, obviously, is security, opening to the world, et cetera. But the question is that so far, the Iranians have not had a roadmap to that. In fact, the very last proposal that Solana gave to the Iranians, the response that they got is that everything the United States wants from Iran is immediate; everything that it offers Iran is potential and conditional and is not concrete.

And there has not been, if you would, any kind of an engagement with Iran that shows a roadmap as to how this relationship's going to get normalized. The Bush administration, for much of its past years, has wanted Iran to suspend enrichment, but then that's the end of it. There is no talk about normalization of relations. In fact, the Iranians have said more about it recently than the Americans have when the supreme leader, in fact, said that it's not a given that Iran and the United States would not have relations ever. It's just that I will decide when that's the case and they cannot have an embassy right now, because all they want to do is to send, quote-unquote, "spies to overthrow the regime", which gives you a sense of how they're thinking in terms of what is the cost and benefit of each step.

MR. TAKYEH: Let me just say one thing: I think in terms of recognition, they're talking about recognition of Iranian power -- recognition of Iranian prerogatives, recognition to some degree of Iranian preeminence.

I don't believe that the current Iranian leadership, led by Ali Khamenei, is looking for normalization of relations between the two countries. That doesn't preclude tactical dealings on the issues of common concern -- our concern and their concern -- which could be very broad. But I think that if you look at the history of the supreme leader -- I'm not talking about Ahmadinejad. If you look at the history of the supreme leader, he views relationship with the United States as undermining the essential pillars of the Islamic Republic, and that's I don't believe there will be normalization of relations so long as that mentality, which is deeply entrenched in the governing elite, persists.

It is often said that conservatives can do things that the reformers and liberals don't do. That's not the case in terms of Iran. The current conservative counter in Iran is the least actor susceptible to a fundamental transformation of U.S.-Iran relations. That doesn't necessarily mean that you can't have sporadic tactical dealings on issues of importance to both parties.

HAASS: Sounds like the Iranian Nixon is not ready to go to China.

The gentleman in the green shirt on the back row.

QUESTIONER: Of course, a smiling journalist.

On the question of isolating Iran and the possibility, I believe, to isolate Iran -- the isolation of Iran -- I just want to say something and it leads to a question.

HAASS: (Inaudible.)

QUESTIONER: Okay. Isolating Iran somehow means, if the U.S. chooses to isolate Iran it can. What that actually has done in Iran is to create the idea that isolationists in Iran aren't' about "let's go back into our borders", they're about creating another alternative to joining the WTO, for example, which was one of the supported goals of the Rafsanjani period was to join the world markets.

Now, the isolationists in Iran are about how do we actually create a market on our own with China, with Russia, with Venezuela and they're doing so. So that's why isolation is a means and I think that's sort of what America has to get used to -- that isolating Iran means, in a way, isolating America. And for Iran to sort of play this role of building a pole for itself or bringing multiple -- a polar world.

In that context, I guess the question really is, is it possible? Is the world -- with the decline in American power, political and economic, is it possible for Iran -- because that's the way Iranian leaders are thinking. Is it possible to actually create a world where they can -- they don't want you in the -- (inaudible) -- anymore. They want to create their little market.

The question for us is, is that possible? And what role does sanctions play in that? The sanctions are emboldening the isolationists in Iran who are actually advocating that line and I think we're helping them in doing that through a sanction.

HAASS: This is coming back to your point. It's almost an anti-integrationist with our definition of integration.

MR. TAKYEH: Yeah, I mean, WTO has never been that big for them -- for particularly, the current cast of leadership. And you're quite right, they're trying to create their own -- what is often called, and one of the first individuals that articulate that, who's very popular in Aman Babel's (ph) circle, was Khaliboss (sp), who would talk about an Eastern orientation. And they're talking about Eastern orientation in terms of having relationship with Russia, India, China and so on and so forth -- Venezuela's one.

And that obviates the necessity of dealing with certainly the Americans, but quite possibly the Europeans.

NASR: I would put the caveat that the relationship with the East can solve many of the economic problems for Iran, but not some key ones. The Chinese and the Russians do not have the technology to rebuild Iran's energy sector and solve the larger problems that Iran has ultimately would require an opening to the West.

HAASS: Mr. Gelb, you get the last quick question, if you still want it. You don't have to have it.

QUESTIONER: Because everything we've heard all day ahs basically had a component in it of let's say as a minimum 50 percent chance that there's going to be some kind of military action. And underlying all of the conversations that, for a lot of people, raises big questions.

Having heard for the last two years and watching the council take quite a bit of time talking about the subject of soft power and the issue of the publics, rather than diplomacy only at the Ali Khamenei level and Condoleezza Rice level.

Is there any possibility that soft power is useful, productive or possible in a country where, as you put it, there is no interest in anything that would even remotely change the attitude toward the existing Islamic form of government?

MR. TAKYEH: Yeah. I mean, I always thought that one of the ways you can spend the democracy money, which has to be spent -- by congressional mandate it has to be spent in the year it was appropriated, I think -- is to have scholarships and so forth to bring people together outside nuclear science classes. I mean, that's normally bringing cultural exchanges, scholarships and so forth, as opposed to giving it to radio broadcasts. I know what radio broadcasts meaning the Europe-global communications systems -- satellites and so on and so forth.

That's one of the ways of bringing the two countries together. Is it going to solve your immediate problems on the nuclear issue, with terrorism and so forth? No. But it perhaps could help Iranians have a better understanding with the United States and Americans have a better understanding of Iran.

It's very difficult -- at this point, it's very difficult for Americans to go to Iran, because this is a country that has criminalized research. It equates research with espionage. So it's very difficult to do that at this point, but perhaps we can have greater number of citizens of Iran and in various American universities. That may have a good effect, it may have bad effect. Sayeeb Gott (sp) was here and he went back and became an inflamed Islamist. So I mean, you've got to watch who you're sending then.

NASR: I would just add one thing that, you know, the soft power -- in another sense, not just about Iran -- it's also about the region in which Iran is playing it's hand. First of all, there is the issue of Iranian soft power in an area that is of America's interest. And it's -- you could also think of, forget about Iran itself. We have to think much more smartly about what do we do about our soft power in the Arab world and the Middle East, in Pakistan and Afghanistan, which is the arena in which the Iranians are also playing and trying to exert influence.

And you know, the decline of American influence, the rise of anti-Americanism in the Middle East has not benefitted our policies -- not just toward the Arab world, but also towards Iran. And that's exactly why the Iranians can leverage this kind of bad behavior and translate it into political capital.

HAASS: With that, let me just do a couple of things. Let me thank these two gentlemen. As you can see now, I was not exaggerating when I said all those positive things about them.

Let me thank you all for your interest and your perseverance. Perseverance and interest, however, will be rewarded. There is a buffet lunch that is available precisely now. And I expect there'll be some hard food and soft food there for all of you. So thank you all very much. (Applause.).STX

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

RICHARD N. HAASS: Okay, why don't we get started. This is the third movement of the Iran concerto. I'm not sure it'll be allegro -- (laughter) -- but we will, we will see. With us are two of the leading thinkers -- just about anywhere, on the subject of Iran and U.S. policy toward Iran. We are fortunate to have them associated with the Council. We are fortunate to have them with us today -- Vali Nasr, Ray Takeyh. They need no introduction and, as a result, they will get none. (Laughter.)

The first session was on Iran's internal; and the second session, as you know, was on their nuclear programs, and all that. And when we get to the Q&A, I wouldn't be surprised if we returned to some of it -- obviously, there were questions on the Israeli angle, and all that.

But, what I really want to focus on in this last session is U.S. policy toward Iran, because early on in the new administration I would think that one of the first interagency processes of the 44th president will be to test this -- will look at the full range of our U.S. interest concerns, what have you, vis-a-vis Iran; and they will, basically say, do we want to change what we've been doing? If so, to what degree?

But if this were such a drill, or if this were a Council task, the first thing we'd want to do is at least make sure we understood what exactly was U.S. policy towards Iran. So, what I'd like to do is make that the first question, because it's -- I was part of the process for several years of trying to shape it, and so I know a little bit about it.

I wouldn't exaggerate what I know. But, let's just sort of posit what U.S. policy is before we then assess it; before we discuss ways we might change it.

So, Ray, How would you describe, now, U.S. policy?

RAY TAKEYH: Well, I would describe it as two policies. For some reason I don't think there was one. There's actually two. (Laughter)

First of all, there is what happens outside the region, and this has to be through a series of Security Council resolutions that, in and of themselves, don't have substantial coercive power. But they're supposed to convey to the Iranians a measure of international consensus and solidarity against a nuclear infractions, which establishes the basis for informal sanctions that have been inactive, outside the U.N., in cooperation between United --

HAASS: Can I just interrupt? I'm going to be really rude for a second. Before we start talking about the instruments of the policy, what do you think are the goals of U.S. policy towards Iran?

TAKEYH: I think, at this particular point, is to restrain Iranian power, constrain the nuclear program. But those are rather an amorphous aspect of this policy, so there's not that clear pronunciation of it.

And the instruments are, as I've said, they take place outside and within the region, trying to mobilize a regional consensus against expressions of Iranian power.

HAASS: That sounds then -- if the purpose of it is to put a ceiling on the nuclear enterprise, and to constrain or limit the spread of Iranian influence as a result of Iraq, that sounds a little bit like containment.

TAKEYH: Yeah. On the nuclear issue, I would suspect they would want Iraq to have no measurable enrichment capabilities, yeah. So, that's not restrained, that's --

HAASS: That's actually more than that.

TAKEYH: Yeah.

HAASS: That's actually a bit of roll-back in the nuclear area; and containment, if you will, in terms of -- would you buy that?

VALI NASR: I think actually it's rolled back everywhere. It's maybe only very recently that the administration has tried to calibrate its capability, vis-a-vis its goals, and it may have backed off to just try to constrain Iran. But the U.S. wants Iran out of Lebanon; wants it -- not only not come into the Arab-Israeli process, but eliminate all of its influence there.

The U.S. goal for much of the Iraq war was that the Iranians should leave. In fact, that probably was the tenor of the discussions between the U.S. and Iranian ambassadors. And, similarly, in Afghanistan, they quickly, after 2002 -- particularly after the Iraq war, the U.S. also wanted Iran out of Afghanistan as well. I would say -- (inaudible) -- sort of, a frame, is that for much of the past five years the U.S. has wished to go back to 2002. In other words, roll things back to before the Iraq war, as if the Iraq war didn't happen. Put Iran back in its cage; lock the door; and then hope that the regime would fall down. And then also take away their nuclear capability as well.

HAASS: Okay, so if one were going to posit that as the policy -- at the risk of asking a question to which I sense I know the answer, how well is it working? (Laughter.)

NASR: Well, I think -- if I may go first, I think that the main problem is that it was a completely unrealistic policy to begin with. It's a policy of maximal goals with minimal means. And the more -- very quickly, we overreached to a point that even the credibility of getting some modest results began to falter.

And we became very focused, if you would, on whether we were progressing on the nuclear issue -- whether the Europeans and the Russians were helping, et cetera, but in reality, we never managed to change Iran's position in Lebanon. In fact, after 2006, they became much more important

The Annapolis conference failed to eliminate Iran's role in the Arab-Israeli process. In fact, Iran now holds a lot of the cards, at least in the Arab domain. We never were able to force Iran out of Iraq. We've made some gains because of the new stability post-surge, but Iran is not gone. And, similarly, in Afghanistan Iran's presence is there.

And, in fact, the idea of even trying to build a united Arab front that is willing not to deal with Iran -- a Dubai that is willing to cut banking with Iran, a Saudi Arabia that's willing to cut ties with Iran -- none of that has worked. So I think, in some ways, I think the -- the first thing the interagency process has to do is exactly to, sort of, back away and calibrate 'what are our goals, with what are our means?'

HAASS: I assume you're not going to say the policy has been strikingly successful?

TAKEYH: The problem is there's -- as he was saying, there's no regional consensus on Iran. There has never been an Arab consensus on Iran. There was no Arab consensus on Iran during the war -- I mean, you know, Qatar was dealing with them, and so forth. So, attempting to craft a sort of a regional consensus, similar to the one that was done with the Soviet Union during the Cold War, is just impractical.

That has to do something with the way the U.S. allies in the Gulf behave, and so forth. And then we had tried to balance, and hedge, and so on and so forth, as opposed to take unequivocal sides.

HAASS: So, yeah, just to interrupt, to just -- a little bit of a detour; I didn't want to go here yet, but let me just do it. So, when people talk about the idea of Iran, in a kind of anti-Iranian -- to some extent, anti-Shiite, but more anti-Iranian power projection glue to U.S. policy in the region, animating everything from what we used to call "the peace process," to everything else, you'd basically think that's a nonstarter?

TAKEYH: I think it's possible to limit Iran's influence in the Arab East, in the Palestinian-Israeli-Lebanese context. If you have a successful peace process and some sort of mediation diplomacy, it is possible to eliminate the ingredients that lead to Iran to project its influence there. It's possible for Iran not to be a Mediterranean power, but I don't know if it's possible to make sure that Iran is not a Gulf power.

NASR: If I may add to that, I think the Iranians have calculated correctly that the peace process will not go forward sufficiently to really change the dynamic in the Arab world. And, in fact, the U.S. made a big mistake trying to hang its Iran policy on success of the Annapolis conference, and success of the Arab-Israeli issue.

Secondly, I think the Iranians have found out that this anti-Israeli, anti-Holocaust rhetoric plays really well on the Arab street, and it's the best way of blunting the anti-Iranian sentiment on the ground level.

And, thirdly, I think the Arab governments, particularly after 2006 and the NIE report, don't trust -- it's not that they don't trust our policy, they don't trust our competence. They don't think -- they don't want to bet their future, and the future of their relationship with Iran, on an administration who they don't trust can formulate an -- (inaudible) -- policy.

So, they're hedging their bets. It's not that they don't want to contain Iran, it's not that they're favorable to Iran, it's just that they don't trust that we're able to get what we want.

HAASS: Given what we heard in the first session this morning, to what extent should regime change play a part in U.S. policy? Or, ought this to, essentially, be jettisoned either because it's not going to succeed, or it gets in the way of what limited cooperation there could be in other realms?

TAKEYH: I'm not quite sure if there is -- if the problems that United States is experiencing with Iran are subject, or susceptible, to easy diplomatic solutions. Therefore, I think to make the U.S. policy one of -- sort of, ostentaciously a change of the regime, it defeats the purpose of any diplomacy.

However, I would actually differentiate between changing regime, democratization and human rights. I think any sort of a negotiation with Iran should have a human rights component to it, as was the case with the Soviet Union with the Helsinki process.

In that particular sense, what you say to Iran is 'You want to be part of the international community, there are certain norms of behavior that you have to concede to. One is civil society, activities, and so on and so forth; monitoring behavior of your human rights abuses.' I would think that's an important part of an equation to have -- and then sort of a negotiated settlement. For no other reason than it would drive them crazy, because they would object to that because of interference with their domestic affairs, and so on.

But, I don't believe that the United States can have negotiations with Iran without taking into consideration the character of the regime. That's different than the change of regime.

HAASS: But if the United States did that, two questions: Imagine we did that publicly. One, how would that play inside Iran? Second of all, would that cause problems in the region, because we would be holding Iran to some standards we, perhaps, couldn't hold some of our Arab friends to?

TAKEYH: Well, I mean, those human rights discussions take place with other countries as well. It's part of the negotiations we have with Egypt, the Saudis, and so on; and the Europeans who have just negotiated with Iran -- far more successfully than we have, have made human rights a part of the dialogue with the Iranians. And they have actually made some head-ways with that -- inspection of Iranian prisons, demanding the end of certain torture practices, and so forth.

The Europeans, who get sort of a blame for being mercantile and amoral, have actually been far more effective in pressing the human rights with the Iranians than the United States ever has. And in any negotiations that the United States has contemplated, human rights weren't part of it.

A lot of the conversation assumes that the United States and Iran approach things adversarially; there's a -- please turn off your cell phones -- antithetically, that there's no overlap. Let's challenge that for a second, because I was involved in some of the exchanges between the United States and Iran in Afghanistan. And actually there was some limited common cause.

And when I look at the situation in Iraq, for all of the differences between us, I also see that neither of us should oppose a -- more positive, neither of us want to see a country that hemorrhages; neither of us wants to see a country that fails. The United States favored elections. Those elections happened to bring Shiite politicians to power. I would assume, sitting in downtown Tehran, that was not an outcome that they had real problems with.

So, when one looks around the region, are there areas where the United States and Iran can and should cooperate?

NASR: I think, you know, what you say is very important in the sense that even if these areas of common interest are short-run, they provide the trust-building first steps that you would need in order to get to somewhere better with the Iranians. I think Iraq still is a place where Iran and the United States, by and large, are -- by and large, I would say, are on the same page, because they're both supporting the same government.

The Iranians are also hedging their bets, within the Shiite community, by supporting the Sadrists, et cetera. But the Iranians --

HAASS: Have they reduced that support recently?

NASR: Well, they don't have an option, because the Sadrists have been clearly downsized significantly. And that provides an opening. In other words, the only game in town for the Iranians, realistically, is the Iraqi government. It's the government that we're also banking on. Both the Iranians and the United States would want the Maliki government, or some version of it under a different leader, to succeed.

Our interests are the same as Iran in Northern Iraq, about which we don't talk. In other words, the stability of the Talabani-Barzani regime, and their -- and at least some kind of a agreement about the shape of Northern Iraq that would be conducive to Iranian interests.

Around the corner, when the next administration comes out, the big issue would be the Taliban. And Iran was the one country in this region that supported the Northern Alliance, along with India, as you know, against the fight with the Taliban. Again, a strategy of dealing with Afghanistan's stability -- working with the Karzai government, dealing with the drug issue, invariably, Iran and the United States are going to find their points of common interest.

And the third issue is the whole issue of the Caucasus, energy, gas pipelines and Russia. In other words, the way the United States is beginning to think about that region -- namely, how to create energy independence for Europe from Russia, cannot work without Iranian cooperation and participation. And, so you know we may not have enough to think of a fruitful, long-run relationship, but we have enough to at least begin to think of a different kind of engagement.

TAKEYH: The issue of Afghanistan is a peculiarity, because Iranian-American interests in Afghanistan have always coincided, since 1979. And they have never led to a larger cooperation between the two states. They cooperated -- they had the same objective in expelling the Soviet Union in the 1980s, preventing the consolidation of power by Taliban in the 1990s, and the displacement of Taliban in 2001-2003 period. That has never led to a larger cooperation between the two countries. That's one of the diplomatic peculiarities of Afghanistan-Iran-U.S. nexus.

On issue of Iraq, there's a larger agreement between the two powers preventing Iraq from being territorially dismembered; having a diplomatic process -- democratic process that leads to a rise of the (Shiites ?). But between that, and below that, there's all disagreements. Iranians want American forces out of Iraq -- not as precipitously, but out of Iraq. Iranian goal of emerging as preeminent power in the Gulf cannot be sustained so long as there's a sizeable contingent of American forces in the Gulf, whatever their preoccupation.

The relationship with the Sadrist movement is changing. They have a relationship now directly with the militias, or the breakaway militias, special groups, whatever they're called. So there is some degree of disagreement and friction at the ground level, which tends to undermine the larger conceptual agreement between the two powers and the direction -- overall direction that Iraq should go.

HAASS: Has there been, though -- or has there not been some backsliding, if that's the word, between -- involving Iran and the Taliban? My own sense is, whereas in the past the Iranians were quite -- if not unalterable opposed, overwhelmingly opposed to the Taliban, one gets the sense that, somewhat cynically, they've decided the Taliban are a useful instrument?

TAKEYH: Yeah. Sufficiently empowered, but not dramatically so, they can be used as an instrument of inflicting pressure on the United States.

NASR: But I also think that the Iranians are also hedging their bets with the Taliban. I mean, it's the saying that, you know, Ahmed Rashid used to -- liked to say that every shopkeeper in Kabul believes the Taliban are winning. I think the Iranians don't want to end up in the same situation with the Taliban as they were in 1997-98.

It's -- the best time now is to buy their friendship, so you don't have to see the short end of the stick when they arrive in Kabul. Which I think, again, goes back to not just our friends, but also even Iran. There is a belief in that region the U.S. is incapable, essentially, of seeing its policies to fruition. And that allows people, or pushes people to hedge against us, which is not very useful.

HAASS: Which tends to be self-fulfilling.

What is current Iranian thinking vis-a-vis terrorism as an instrument? And has there been any evolution or change?

TAKEYH: Iranian terrorism, it's customary to suggest Iran is the most ardent supporter of terrorism. But, if you look at their terrorism portfolio over the years, it actually has shrank. Part of the Iranian terrorism portfolio was assassination of dissidents abroad. That has stopped. Now, maybe that's because there's not that many dissidents left abroad -- (laughter) -- but still, that has stopped.

So their principal expressions of terrorism, as we call it, would be a support Hezbollah, would be support of Hamas, and whatever they're doing within Iraq. Within that, I think their relationship with Hezbollah is so organic, and is so fundamental to the character, and identity and foreign policy of the country that I don't see that changing. Hamas may be a little different.

HAASS: Why is that -- for a second?

TAKEYH: Hezbollah -- Iranian -- the relationship between the Iranian Shi'a community -- clerical community, and Lebanese Shi'a community, actually predates the revolution. Their relationship that has been mended through seminaries, consolidated through marriage, and Hezbollah has emerged as a successful protege of Iran, particularly in the aftermath of the 2006 war. So, in that particular sense, Hezbollah gives Iran a reach into the Arab piece.

HAASS: Why, when we talk about the Israeli-Palestinian process, or Lebanon, and so forth, why are we talking about Iran? It has no borders. It has no ability to project power in that region. It's because it has these proxies, particularly in terms of Hezbollah, that it can gain it.

Second of all, Hezbollah --

HAASS: Just so I understand, though. When the Iranians deal with proxies such as Hezbollah, is that then because they are seen as useful instruments of projecting and expanding Iranian power? Or is it seen more, because of the Shiite dimension -- it almost reminds me of the debate we used to have about Soviet power versus the spread of communism.

TAKEYH: The reason why that relationship is so important is because it's a marriage of strategy and values. It serves both ideology and tactics. But also, Hezbollah allows Iran to leapfrog over the sectarian divide.

I mean, Vali talks about the, sort of, the rise of Shi'ism, and the Sunni-Shi'a divide. I mean, what is a Sunni-Shi'a divide when Hezbollah flags are flying in Cairo? So it gives you an appeal, to a larger Arab public -- "the street" that he's talking about.

NASR: If I may recite an anecdote. In the morning Ali Ansari was talking about the growth of hand-kissing in Iran. Hand-kissing began with Hassan Nasrallah kissing Khamenei's hand. He's the only Shi'a leader around the world who actually kisses Khamenei's hand. So, that has value too, you know. (Laughter)

HAASS: Hard to quantify. (Laughter.)

There's lots of people that think -- or some people think that, whereas Israeli-Palestinian talks are, shall we say, problematic in the extreme -- for a whole raft of reasons, including the weakness and divisions on the Palestinian side, but Israeli-Syrian talks have slightly better prospects. Would Iran try to stop that when -- and could they? Imagine you did have a situation where the next Israeli government was prepared to try to strike a peace deal with Syria, and Assad was as well. How would Iran approach that?

NASR: Well, I mean, so far the Iranians have not been favorable to the talks, and have publicly criticized Syria. And I think the main sign of the breach is the assassination of the Hezbollah terrorist Imad Mughniyeh, which both Hezbollah and Iran believe was the olive branch that the Syrian intelligence gave to Israel as a sign of goodwill. There's a lot of bitterness about that.

But the Iranians probably figure that it's going to be awhile before there is a peace treaty. And for Iran, I think everything right now is about the next quarter, not the next quarter century. And, you know, the Israelis probably -- they have elections, they're not likely to give enough to Syria to seal the deal.

Iran also has enormous amount of direct foreign investment in Syria. Some say upwards of $8 billion have been invested in Syria. You have a lot of common ground in Lebanon. Syria cannot manage Hezbollah without Iranian help. Israel cannot turn Syria on a dime. At best, you know, the idea of a peace treaty between Israel and Syria is a backing away from war, and probably a, sort of, a cold peace between them.

But even that, I think the Iranians think is not in the immediate future. So, they don't see the real strategic map of this region changing dramatically -- say, in the next six to eight months, which is really critical for them in terms of whether or not they're going to be somewhere else with the United States.

HAASS: Only in the Middle East is facilitating an assassination seen as a sign of goodwill. (Laughter.) But, I will let you all ponder that for some time.

Okay, so you have a new administration in Washington in place. It's the spring of 2009. People at the senior level have been confirmed. Some of the initial reviews have been launched. And when one looks at the question of U.S. policy toward Iran, for a second, what is the relationship between our previous session -- the emphasis on nuclear, and everything else, to what extent does that -- should that dominate?

And even beyond that, to what extent should the United States try to impose linkage in its relationship with Iran? Or should it basically say, every boat on its own bottom. If we can make progress in the nuclear, great, and if we can't make progress, at the same time, on terrorism, so be it. How should the United States approach its relationship with Iran?

TAKEYH: I mean, Ash touched on this in the previous session. I think when you were talking about limited negotiations over arms controls issues, or larger negotiations where arms control would be a component of a larger context between the two countries, I suspect, that's the best way of approaching it, because I think there is a conceptual divide between Iran and the United States on the nuclear issue.

And Iran and the international community on the nuclear issue. Iranians look at negotiations as a means of offering confidence-building measures so they can proceed with a nuclear program. The United States looks at negotiations as a means of stopping their nuclear program. So, that conceptual divide, I don't know how it's going to be bridged.

But perhaps in the larger context of negotiations between the two countries that deal with stability of Iraq -- Gulf security, diplomatic and economic sanctions, frozen assets, Hezbollah, and so forth, maybe you can make some progress. Now, if all these issues are linked, then that's the formula for paralysis.

HAASS: But just so -- but just so I understand, does that mean the United States has two baskets of sanctions? One is a basket of sanctions we'd either raise or lower, depending upon the nuclear issue; and the other is a basket of sanctions we keep in reserve for everything else?

TAKEYH: No, I'm not suggesting that. What you're trying to do -- essentially, some of those sanctions will have to be modified over time anyways.

One of the easiest things the United States to do is to deal with the frozen assets issue, which would be, symbolically, even very powerful; the diplomatic recognition issues, or moving towards establishment of diplomatic recognition. But that's the complexity of these negotiations, is how much of your grievances with Iran are you willing to live we?

At the end of negotiations, you should be prepared to enter a period of ambiguity, where none of these issues are resolved conclusively to anybody's satisfaction. How much of a Iranian nuclear program can you live with? How much of Iranian influence are you willing to concede in Lebanon? How much of an Iranian presence is acceptable in Iraq?

And if the answer to all those questions is "none of the above," then I wouldn't actually suggest negotiations, because then you're trying to get to negotiations what you couldn't get through containment and coercion.

NASR: I would not disagree with Ray, but I would think that with a new administration there is a framework problem, in a number of ways. One is that we have an Iran problem, and we see it essentially just as a nuclear problem. Every discussion begins and ends about, 'what are we going to do with that.'

But I think it's a much bigger problem. And I think it's -- I went back to your introduction this morning, that it's not possible for us to get the greater Middle East right unless we properly understand the role of Iran in the region. Then, you know, we have to sort of approach this thing completely differently.

And I think the Iranians look at it this way; in other words, the nuclear issue, for them, is a lever to changing their whole status in the region. I think one of their strategists said that either this issue will solve absolutely everything between the United States and Iran, or there's no point even talking about it.

And I think, you know, it might be the case that it's too late. That, for so long, the United States has made this only about suspending enrichment and ending the program; that we, sort of, have gone so far down this road it's very difficult to come back from. But unless we find a way to broaden the Iran issue, in the context of our understanding what's happening in that region, I think we're not going to get it right.

HAASS: But, let me just sort of, play that out for you, just so I understand. If you thought of the U.S.-Iranian negotiation as one of, for want of a better word, "multiple baskets" -- you have a basket called "nuclear," you have a basket called "human rights inside Iran," you had a basket called "Iraq," one called "Afghanistan," one called "Lebanon," one called "Hamas," whatever, "Hezbollah," "terrorism." If you had 10 baskets from, you know -- and maybe "assets," and some of the baggage, if you will, left over from the last three decades.

Imagine you started talks on the nuclear, and couldn't make any progress there. Do we deny ourselves leverage? Is that the right way to think about it, if we still go ahead on the other baskets as best we can? How is it we ought to structure these talks, because it seems to me we have to think about leverage; we've got to think about priorities; we've got to think about what might influence Iranian behavior, more so before we do something about flying out assets.

What do we link? The flowing out of assets? Or do we simply say, here, have it. We're going to flow out some assets in the hopes that, therefore, you reciprocate? How do we structure? How do we think about this?

NASR: Well, you know the way it's been figured is that the nuclear issue is on the forefront. First of all, it's been there; secondly, because there is a very tight timeline attached to it. You want the Iranians -- if we can intervene in the program before they get too far ahead, as both Ash and Gary mentioned.

But I think, you know, the idea of talking with the Iranians about everything at the same time may not be the best approach, right. I mean, they might have to sequence it. There are things that we are closer with, and it's possible to get at least a certain modicum of agreement on faster, and build trust that then would be parlayed into the --

HAASS: For example, what do you see as some the lower hanging fruit?

NASR: I would say still Iraq, Afghanistan and the Caucasus as probably lowest hanging fruits. I mean, it's possible for us to have a different kind of a discussion on Iraq. I don't think we've been talking to Iran in Iraq at all. The two ambassadors meet to give each other demarches. You know, a list --

HAASS: They're not even meeting.

NASR: -- they don't meet anymore at all. But there isn't -- there is no fruitful engagement of looking at what are each other's interests, and how they can have a constructive view of supporting the same goal in Iraq.

We could have a similar kind of a framework about Afghanistan. We actually had it. Not only at the Bonn conference, but actually for the one year or so after Ambassador Khalilzad was in Baghdad he would meet with his Iranian counterpart and it wasn't worth beans. And they got a lot of things done before they went to Loya Jirga.

One of the dilemmas we have is that, actually, the most difficult issues, that we are farthest apart, are the ones that are on the forefront of the Publican (ph) and the policymakers in the United States. And they completely overshadow where we could actually be gaining things.

And I think, you know, we also have to have a long-run game plan. I mean, is the aim only to mitigate Iran's worst behaviors in multiple arenas, and then leave it alone? Or, do we have -- as it was the case with China, a grander strategy of bringing Iran in from the cold? But if our aim is really to -- is not just fixing one, two, three, four things, but really changing the profile of that country, then I think we need to think about the sequence of things that get us there a bit faster.

HAASS: Do you think what you were describing -- to use my language -- I'd say integrating Iran?

NASR: Exactly.

HAASS: Is that -- what's your sense of it? Is that a pipe dream? Do you think that's a real option? Are you thinking in terms of years, decades, generations? And if you are thinking about it, is there a sequence that you would say here's how to do it or how not to do it? I mean, is this a -- I mean, because it was the U.S. policy, in some ways, towards China. There's been elements of it towards the old Soviet Union, to some extent with Russia. Is this a realistic option, given the nature of the Iranian regime and its own foreign policy goals?

NASR: I think it's a difficult process and it's not going to be quick, but I think at least beginning the process and setting the mechanisms in place is not that unrealistic. And I think, in fact, if anything the sanctions are probably the single biggest negative here, because closing Iran to the world economy, reducing the leverage that Europeans, Americans have within Iran, reducing relationships between Western and even regional business communities with the areas in Iranian government, civil society, business community that would be supportive of that change is not actually beneficial.

So I think a policy of isolating Iran is not going to help integration. In fact, one of the most important outcomes of the sanctions has been a much more aggressive turning towards China within varieties of economic sectors in Iran. And that only will in the long run make this much more difficult.

Iran is deeply integrated into the Middle East structure. It has security projections all over the place. Its trade with Europe has gone up -- 17 percent with Italy, 30 percent in France, Germany. The only country whose trade has declined with Iran in European countries is actually Britain.

The level of trade with China and Russia is deeply increasing. I don't know what -- the United States -- does the United States have a key to Iranian integration in the era of global economies? So Iran is not a country that's isolated like North Korea is. I mean, you can't a bank loan from UBS, but they seem to be doing okay nevertheless.

So it's important to recognize that we might not have the keys to preventing a country whose principal export is a commodity that international economy desires and relies on can be integrated or disaggregated from the international community at our will. That is not potentially a leverage that we possess.

The leverage that we possess is having an understanding of the Iranian government that has, in my view, re-conceptualized its national interests. It doesn't even use national interests as necessary economic gain, but security advantage. It's a security driven -- its principal goal is to increase its power and influence in the Middle East. And that is potentially a leverage that you possess in terms of integration of Iran into a security structure of the Middle East.

HAASS: Well, let me just press you on that. What is the --

TAKEYH: Please don't! (Laughter.) I don't understand you, really.

HAASS: Since you don't understand what I mean, I don't understand what you mean. And one of the interesting things you've got to do in diplomacy is figure out not just how much things matter to you, but the value you believe they have for the other side. And usually in negotiations, the marketplaces are not equal.

TAKEYH: Yeah.

HAASS: There's a dis-equilibrium between, if you will, between the two marketplaces.

So what is it that Iran would value most? Is it, for example, some sort of an American security insurance -- conditionalized it might be. What is it the Iranians are looking for -- or is it the assets, is it diplomatic?

If they were having this conversation, how would they structure their list and what is it that they care most about from us?

TAKEYH: I don't believe they're looking for security assurances. As a matter of fact, they openly scoff at the idea of security assurances. No country predicates its security on assurance of its adversary. France and Britain achieved independent nuclear capability irrespective of security assurance from an allied country. Nobody bought the idea that we'll put New York at risk to save Berlin.

So if an ally country doesn't believe in that, how do two countries with deep-seated --

HAASS: Actually, the Soviets did, but that's okay.

MR. TAKYEH: So how did that affect countries which are adversarial to one another? So let's put that aside.

Security assurances is different from a security dialogue between the two countries. I would say, at this point, there's a debate within Iranian security establishment, as I understand it. And the debate on one side are those who believe that Iranian preeminence in the region can only come about as a result of confrontation with the United States. It's a prize to be achieved through confrontation and defiance and what they call confrontational diplomacy.

And then there are those who essentially actually subscribe to Shah's ideology, that the only way Iran can become a leading power in the Gulf is through a different relationship with the United States. That American power might be declining, but they can still be a potential barrier to Iranian resurgence. That is the debate.

Now, the way you impact this particular debate is for the United States to become more active diplomatically. It may not work, but I think that's where it -- that's where I would situate the debate.

NASR: I agree. And I think you can also partially, for sure, what price -- what is the value of what Iran has gained since 2003 to the regime and this issue of security. I think, you know, ultimately the only assurance we can give in security is an American embassy in Tehran.

HAASS: So they can take it over! (Laughter.)

NASR: No, I mean -- but in reality, in other words, the security assurance will not come in terms of any kind of a guarantee. It means when you have a relationship with another country, you would feel more secure than when you don't.

So I think, you know, that's why exactly that's where Iran ultimately could give up the nuclear power. It's not a matter of just a few carrots and a few sticks. It wants a completely different kind of relationship with the United States.

Secondly, I do think there is a lot of value to what Iran has gained in this region for it -- whether or not it intended to make these gains; whether or not it's the U.S.'s fault -- but Iran is staking a lot of its political capital in the region and domestically on maintaining its position in Iraq, in Afghanistan. The entire risk they're running by a very aggressive anti-Israeli policy in order to pacify the Arab world or to have Ahmadinejad the number one in a poll by Al-Ahram in Cairo.

These all suggest that they look at this very -- as something they want to keep. And you can see it even among the most pragmatics in Iran would say, look, the only country that's ever invaded Iran is Iraq. And the only aggressive attack against Iran in modern times has come from that neighbor. Iran has to be in Iraq in order to protect itself. The defense of Iran begins in a forward position in Basra, in a sense. And therefore, even they are arguing that Iran cannot be excluded from Iraq. It wants to maintain that position.

So I think, you know, if there was absolutely successful negotiations between Iran and the United States and they really solve all the problems, I think where I would differ with the Bush administration -- the Bush administration thought that the result would look like 2002 and Iran would agree to leave Lebanon/Palestinian issues, Iran and Afghanistan.

I think if we're really successful, the result would be a recognition of Iran's position in this region, that they will be invited to the next Palestinian conference; they will have a say in who's going to be the president of Lebanon; they will -- you know, one of the reasons they want us to leave the region is because that's part of this reality -- that they will actually have a say in the future of Iraq, formerly, and also of Afghanistan. That they will look a lot more like the Brazil or the China or the India of this region than merely one of the 20-some countries in the Middle East.

So I think that's something to negotiate with them.

HAASS: What'd be in it for us, then?

NASR: Well, what would be in it for us is the facts -- we've begun this discussion by believing that the fact of Iranian power is something bad. Iranian power in this region is not bad in and of itself. It's only bad if it's working against us. In other words, we didn't have a problem with the shah owning the Persian Gulf when we didn't have a problem with the shah.

Our position's very different from the Arab world. The Arab world really doesn't care about the Iranian regime. It cares about Iran. It's inherently anti-Iran. It would have a problem with a democratic Iran asserting hegemony; it would have a problem with an Islamic republic asserting hegemony.

I think if the United States can arrive -- the end result of this discussion would be that the United States ends up getting many things that it wants; that Iran's presence in this region would not be disruptive; that if it gets a role in Lebanon and Palestinian issues and Iraq and Afghanistan, it wouldn't be standing out there throwing stones; that it will not destabilize governments around it; it would not support subversive regimes; it will not promote and export revolution. And potentially, even, it will sort of solve the security functions around the Persian Gulf so we won't have to have 180,000 troops and two aircraft carriers for an indefinite time period in order to deal with this region.

I mean, the main gain for us is reducing a very expensive and undesirable security footprint in the region. And also being able to bring Iran from where it now to a different base. The price for it is the price of a much more influential Iran. Now, the dilemma we have is that the Arabs won't go along go with this.

HAASS: To say then on your statement -- to deconstruct, though, what you said, which is in some ways accepting -- I don't know if the word is the institutionalization of Iranian power -- something along those lines -- implicit in that, to use Kissinger's writing about Germany in a very different context in the late 19th century, that Iran is conceivably not a revolutionary power; otherwise, why would we want in any accept it or institutionalize it? And that any conversation with Iran cannot be narrowly nuclear only.

But implicit in what you're saying, it seems to me, is an Iran -- the project of Iranian power is not only bad; and second of all -- indeed, to some extent could be good; and secondly, we are looking, if not a grand bargain, at least at a very broad conversation with Iran.

NASR: Exactly. I mean, Iran -- I agree with Ray. Iran can go down different roads. It can go around the road of Japan of 1930 or it can go around the road, which is much more constructive: the road of India. And I know even we had this discussion that, you know, if Iran goes with -- gets the capability, even short of ever using it, it can become a far more aggressive country.

That, I think, is a very distinct possibility. But it's also possible that Iran may behave a lot more like India after it got the bomb. It relaxed; it began to turn its attention to other things. And the key question is that some of these issues are fluid at this point in time. And I think Ray's absolutely right that these debates within Iran are very -- are ongoing. And part of the whole use of aggressive diplomacy by the United States should be to try to somehow interject ourselves in that debate, to have a say in which direction Iran would lead.

HAASS: Let me sort of ask, then, one last question to get operational for a second.

As I listen to you then, one of the outcomes of the inter-agents review about what happened in the spring 2009, I would assume would be that you would want to see is quite possibly a more active American diplomacy with Iran, even an Iran coordinator or envoy, but one who had a very large set of issues in his or her pocket -- not a nuclear-only envoy, but essentially a nuclear-plus envoy that would be free to raise virtually any bilateral or regional or even global issue. So is that about right?

TAKEYH: Currently, that's only the political directors for Europeans and Iranians. So it comes, you know, technically it comes to that office. So if you want to begin with an envoy, you have to disturb that configuration.

What Vali was trying to suggest is can you -- and I don't know the answer to that -- can you concede to an Iranian hegemony and turn it into a force with begin power, which essentially was the U.S. policy during the shah of Iran? Was that right, to some extent?

HAASS: Why would it have to be hegemony? Why couldn't it simply be significant Iranian influence? Hegemony -- the idea that the United State would concede hegemony over this, by the way, seems to me a nonstarter. It may not, however, be possible to exclude Iranian power.

So the real question is on what terms should the United States be prepared to countenance Iranian power?

MR. TAKYEH: There's a differentiation I would make between different parts of the lease, is the policy can probably work in terms of having greater cooperation or security issues in the Gulf and Iraq -- although that comes at the price of intense allied management, but there'd be some Gulf security and Gulf countries that will object to that.

I think in terms of the Arab peace, in terms of the Lebanon and the Palestinian area, our interests are divergent, because the actors that we want to disarm and marginalize -- Hamas and Hezbollah -- are those that Iran sees as necessary for its influence to their power. So I don't know how you bring Iran into a discussion on the Israeli-Palestinian-Lebanese peace process over vociferous objections to begin with of the Israelis. The invitation of Iran to Annapolis would be kind of difficult, given the fact that they came on the heels of a country that held a conference denying the Holocaust.

I mean, that's -- you know, I can see -- in Lebanon -- I can see a discussion between three powers in Lebanon. You know, Iranians had a diplomacy toward Lebanon. They wanted to mediate the civil war in Lebanon in conjunction with the Saudis and two countries objected to that: Syrians and the Americans for different reasons.

(Cross talk.)

NASR: No, let me put it this way: This is why I think the word "hegemony" and the way we look at it, by the way, is very important. The Iranians may want to go in this to protect hegemony, but in a successful negotiation they will come out with something far less. And I think the model is probably India.

I mean, we at some point tacitly accepted that India will be the prima center part of the dominant source in South Asia, and that the United States will stop trying to prop up Pakistan to continue to challenge India's position. And you know, by and large, India's not hegemonizing the region, but it's a recognized fact that, you know, it's the dominant force in the region.

I think, you know, the points that Ray raises are correct, but that's all because we cannot come to these issues without having a framework to begin with. We cannot all of a sudden invite them to Annapolis or begin a discussion with Lebanon when it's not part of an overall framework of where we're going with Iran.

And I think, you know, before getting into -- I mean, the first thing I think in a new administration, if it's serious about such a vision, is not to come up with mechanics. But it has to be sort of a declaration from the stop -- a statement of intent that, you know, that is where American position on the Middle East and American view of Iran is going.

And I think, you know, that's not going to come without having to have serious back channel discussions with Iranians to sound them out; to, you know, to have also elicit, if you would, sense of whether you were going to have a partner in figuring out these negotiations. The negotiations are going to be difficult enough.

HAASS: I would think, for what it's worth, the most you're going to get is a statement that indicated American conditional readiness -- emphasis on the word "conditional" -- to accept certain projections of Iranian power, dependent upon how Iran were to exercise that power, whether we saw it as constructive or destructive.

And I think the biggest intellectual question for the new administration won't be mechanical. It will be conceptual, as it always is, which deal a lot with the question of linkage and to what extent the United States is prepared to disaggregate, if you will, the Iranian challenge; or to what extent, in particular, we would require that the nuclear issue be settled as a -- I don't want to say precondition, but as a necessary element of a larger relationship.

Put another way, whether it's possible to conceive of a better U.S.-Iran relationship absent satisfactory progress in the nuclear realm.

MR. TAKYEH: Well, you have to define what "settled" means.

HAASS: Well, exactly. And that's, you know, one of the questions and obviously, there's a range of views.

Okay, since we resolved everything, we're going to open it up now. And again, this is the last of the sessions, so I think a lot is fair game, whether it's narrowly on what I've been trying to pry these two gentlemen are or not.

Sure, Ken.

QUESTIONER: Thank you.

First of all --

HAASS: Introduce yourself.

QUESTIONER: My name is Kenneth Bialkin.

First of all, I'd like to say this has been a fascinating discussion. I'd like to congratulate you, Richard, for provoking a discussion that has helped many of us focus ourselves on issues that we've been thinking about. Perhaps the discussion has been very helpful in helping us direct our long views and I thank you very much for that.

In listening to the discussion, however -- and you raised the question of interagency review in the next administration to see what the policy toward Iran ought to be -- I'd like to start with the abiding question of do you think the approach to that interagency review would precede from the same basic assumptions, irrespective of which candidate, McCain or Obama, gets elected? Is that review likely to be independent of expressions so far seen at this stage of the campaign by each of the campaigns, or will that review be preordained by policies already in place?

I took it from the debate that both speakers, to a greater or lesser extent, advocate diplomacy, engagement and discussions with Iran on trying to find those areas where you can find a middle ground, while at the same time ignoring their fundamental precept -- namely that it's an Islamic republic; it is run by a theocracy; it is an absolute policy, grounded in certain radical views of the Koran, which is sustained by the forces of terror.

And the present administration --

HAASS: That's -- you've got to --

Q -- takes that view and the present administration would follow the advocacy of the two of you in various forms, with the label of a appeasement.

HAASS: They call it -- (inaudible).

QUESTIONER: I would call it appeasement. (Laughter.) And maybe a different view is proper, but isn't your advocacy of engaging Iran, as though they did not have the fundamental precepts expressed by Ahmadinejad and the supreme leader -- can we afford to ignore those statements and make believe it's business as usual and is that appeasement?

NASR: First of all, I think, you know, even the policy of not talking to our enemies, we already got over that in Iraq. We talk to plenty of people, you know, who are shooting at us and we renamed a lot of the terrorists as sheikhs and they're not on our pay.

Certainly I would say that, you know, the Iranian regime, without a doubt, has an ideological component in it. And in many ways this is not unfamiliar to us. We dealt with the Soviet Union as well in periods in which its leadership -- or with China -- had very, very restricted and ideological views of the world. When the United States engaged China, the Chinese were hardly a moderate leadership then. They had killed millions of their own population in a cultural revolution.

Diplomacy does not mean throwing the towel in with the Iranians. If you looked at the current situation, war doesn't look good. As we saw in the last panel, it may not even get us what we want. It's very clear that in all quarters of the United States, the current situation is unacceptable as well. In other words, that the Iranians would continue to build centrifuges and snub their nose at the United States.

Well, the only alternative really remains is that how can you -- you need to try something that you haven't seriously tried. And I think that diplomacy off the bat has a game-changing quality, because if nothing else, it will throw the Iranian game plan into a tizzy. The Iranians have been operating on the basis of assumption of the past -- on the past six years. That this administration is not serious about talking; it will not talk. There's no point talking to it. And at the same time, it's increasingly toothless. It cannot do anything militarily either.

And if there is a serious engagement with Iran, which doesn't mean giving in, but is a serious engagement, the Iranians would have to calculate things differently. I mean, there are voices in Iran which often say, you know, put something on the table that will create a breach between the Iran people and its regime; put a deal on the table that would actually much more open up the debate that Ray talked about.

None of that we have tried. I mean, we have not really seriously contemplated what uses diplomacy can have for all purposes -- not to please the Iranians, but to get suspension, to get to getting a change of behavior in arenas that matter to us.

HAASS: We've got lots -- Ambassador Murphy.

QUESTIONER: I'm wondering what do you believe has survived of Ayatollah Khomeini's interest in Islamic world leadership? And what the present leader -- what priority the present leaders give to the Shi'ite-Sunni rivalries, and in that connection, what has been their reaction to Rafsanjani turning up with King Abdullah in an interfaith conference and hands across the Shi'ite-Sunni divide? How seriously do they take that sort of activity?

MR. TAKYEH: The Iranian policy since 1979 was never to describe themselves as a Shi'a power. It was always an Islamic power. The Iranian model of governance had relevance beyond the Shi'as. It was the Saudis and others that called them Shi'a in order to (ghettoize ?) them, put them in a corner and prevent their influence. So there's always been a more of a pan-Islamic aspiration and that has sustained itself.

I have a different view of the Iranian leadership, maybe than Vali and others do. Mainly, I think the number of people that are involved in actual decision-making has lessened over the years. That's what Ali Ansari was saying this morning. I would differentiate between a governing elite and a political elite. And the governing elite have lessened and there is a lot of political elites.

And what the governing elite brings to power is a combination of ultra-nationalism or what Ali would call vulgar nationalism and still a tinge Islamism. And the Islamism is what defines and actuates your opposition to Israeli-Palestinian accord or leads you to cast aspersions or deny the legitimacy of the state of Israel. So there's an Islamic component that still conditions Iran's international relations. I don't believe the Islamic Republic's international relations can be entirely similar to that of the Shah, which was not necessarily dealing with the religious complexion of its antagonists and so forth.

So it's always going to be a state that is somewhere between pragmatic definition of national interests and revolutionary values and it's always going to have that dispersive component to it, which makes it an infuriating negotiating partner.

HAASS: I've got about a dozen people. So if you'll be succinct, and I'll ask my two colleagues here to be succinct, we'll get as many of you as we can.

Given the picture you've already given us of U.S. interests and U.S. policy, what do you think U.S. policymakers think they will be accomplishing for both an overt Iran democracy fund set of activities and through what are reported to be the covert operations that supposedly secret presidential findings have begun stepping up? To what extent is there something of a "hail Mary" pass to regime change in is? Or is it simply a way of trying to get leverage? To what extent can it be productive or counterproductive?

MR. TAKYEH: You know, I have to confess, I don't know about the covert stuff. I read what I read, unless you have the ethnic -- Iran is an ancient nation whose boundaries are largely intact. It is not an amalgamation of kind of ethnic groups put together by British mpireans. So it's a different country in that sense.

I don't know at this particular point. I mean, Condoleezza Rice has said many time that our policy is not regime change, it's regime behavior. The problem is they don't believe it. And will they believe the successor as easily? This is a political leadership, as Vali was saying, that lives its conspiracies. So to some extent there is a degree of mistrust that they bring to the table which has to do with their own experiences and their own upbringings and their own kind of calculations that are unlikely to be mitigated by American pronouncements.

HAASS: Liz Chatter (ph).

QUESTIONER: (Off mike.)

HAASS: The microphone up front.

QUESTIONER: I was struck by the comparison that you made in terms of the India model. And I would suggest that there were decisive shifts in India's policy, without which a good relationship between India and the United States would not have been possible. And there were really, you know, serious compromises besides structural changes. You know, the collapse of the Soviet Union, rise of China, created very compelling reasons to see certain kinds of convergence.

So I was just wondering where is it that Iran can shift its policies to come some distance to meet the United States to make such a positive -- (inaudible)?

HAASS: And in particular, could it happen with oil at $120 a barrel or would we need to see oil at $80 or $60 a barrel to see the Iranians maybe rethink their worldview?

NASR: Well, I mean, it's useful to talk about India or China, et cetera, as sort of general ways in which we can imagine the future. They're not identical in anyway.

Just as, you know, India began to shift its position requiring economic changes that came after a period of economic downturn, it also had a major change internally when the DJP came to power with a very different idea about foreign policy. And also, you had the collapse of the Soviet Union. There's no doubt that the neighborhood in the Middle East has drastically change. And that in itself has opened certain possibilities. Oil is, obviously, a very important factor.

But I think, you know, thinking about this issue, you have to think that the Iranian leadership looks at everything in a cost-benefit analysis. The problem, I think, is not so much of, you know, whether or not to make a shift, it's that the cost of the very first handshake with the United States is extremely expensive for Iran. It loses all of its position in the Muslim world as the leader of the rejection front; all of the political capital that it has on the Muslim street. And therefore, it evaluates the policy shifts that it makes in light of what it's going to gain as a consequence of what it's going to give up.

And in the mind of that leadership, I think, it's so vested in this entire political capital that it gets from it being the bad boy of the Muslim world and the Middle East, that it has to think that it's going to get something that is very fruitful.

And in fact, going back to that first question, if the United States wants to think, what is the one of the major benefits that it gets from brining Iran into some kind of an engagement, is that it would have a major impact on that aspect of politics in the Muslim world and the role that Iran plays with it.

HAASS: Bob Nisan (sp).

QUESTIONER: In this interagency discussion and back channels and all the rest, and what Ray said, how do you know to whom to go to start this discussion? Who has the power to deliver? If you talk about the political front doesn't and the religious front does, and to whom do you go and how do you start and which backchannels do you go to?

MR. TAKYEH: Javier Solana negotiates regularly with the secretary of Supreme National Security Council, which at this point is Saeed Jalili. He was recently elevated as not just a presidential appointment to that council, but also a representative of the supreme leader. That's a port of call. And he's sort of way out there in terms of his ideology. So that's the port of call.

HAASS: Allan Gerson.

QUESTIONER: Allan Gerson.

You may have answered the question when you talked about the costs that Iran calculates that would be involved in a handshake with the United States, but at the end of the last session there was an intriguing point made for the floor. It was suggested by an individual that watches Iran closely that what the Iranian leadership really wants is recognition by the United States -- or they it's on the top of its list -- and the opening of diplomatic relationships, not withstanding its commitment to confrontational diplomacy in certain quarters.

So my question is how important is it to the Iranians to have recognition by the United States and diplomatic relations; and if it is important, how does U.S policy leverage that?

HAASS: That's almost the opposite of the argument that its less of a cost for the Iranians than it is, if you will, a benefit to have an open dialogue with the United States. Which is it?

NASR: Well, every policy or every decision the Iranians make involve giving up something and gaining something. What they give up is the political capital that they have in the Muslim world in terms of their being the rejection front. And also, if we think even in some of the exercise of Iranian power in the region, it is essentially poised against U.S., Israel and the moderate governments.

Now, the benefit, obviously, is security, opening to the world, et cetera. But the question is that so far, the Iranians have not had a roadmap to that. In fact, the very last proposal that Solana gave to the Iranians, the response that they got is that everything the United States wants from Iran is immediate; everything that it offers Iran is potential and conditional and is not concrete.

And there has not been, if you would, any kind of an engagement with Iran that shows a roadmap as to how this relationship's going to get normalized. The Bush administration, for much of its past years, has wanted Iran to suspend enrichment, but then that's the end of it. There is no talk about normalization of relations. In fact, the Iranians have said more about it recently than the Americans have when the supreme leader, in fact, said that it's not a given that Iran and the United States would not have relations ever. It's just that I will decide when that's the case and they cannot have an embassy right now, because all they want to do is to send, quote-unquote, "spies to overthrow the regime", which gives you a sense of how they're thinking in terms of what is the cost and benefit of each step.

MR. TAKYEH: Let me just say one thing: I think in terms of recognition, they're talking about recognition of Iranian power -- recognition of Iranian prerogatives, recognition to some degree of Iranian preeminence.

I don't believe that the current Iranian leadership, led by Ali Khamenei, is looking for normalization of relations between the two countries. That doesn't preclude tactical dealings on the issues of common concern -- our concern and their concern -- which could be very broad. But I think that if you look at the history of the supreme leader -- I'm not talking about Ahmadinejad. If you look at the history of the supreme leader, he views relationship with the United States as undermining the essential pillars of the Islamic Republic, and that's I don't believe there will be normalization of relations so long as that mentality, which is deeply entrenched in the governing elite, persists.

It is often said that conservatives can do things that the reformers and liberals don't do. That's not the case in terms of Iran. The current conservative counter in Iran is the least actor susceptible to a fundamental transformation of U.S.-Iran relations. That doesn't necessarily mean that you can't have sporadic tactical dealings on issues of importance to both parties.

HAASS: Sounds like the Iranian Nixon is not ready to go to China.

The gentleman in the green shirt on the back row.

QUESTIONER: Of course, a smiling journalist.

On the question of isolating Iran and the possibility, I believe, to isolate Iran -- the isolation of Iran -- I just want to say something and it leads to a question.

HAASS: (Inaudible.)

QUESTIONER: Okay. Isolating Iran somehow means, if the U.S. chooses to isolate Iran it can. What that actually has done in Iran is to create the idea that isolationists in Iran aren't' about "let's go back into our borders", they're about creating another alternative to joining the WTO, for example, which was one of the supported goals of the Rafsanjani period was to join the world markets.

Now, the isolationists in Iran are about how do we actually create a market on our own with China, with Russia, with Venezuela and they're doing so. So that's why isolation is a means and I think that's sort of what America has to get used to -- that isolating Iran means, in a way, isolating America. And for Iran to sort of play this role of building a pole for itself or bringing multiple -- a polar world.

In that context, I guess the question really is, is it possible? Is the world -- with the decline in American power, political and economic, is it possible for Iran -- because that's the way Iranian leaders are thinking. Is it possible to actually create a world where they can -- they don't want you in the -- (inaudible) -- anymore. They want to create their little market.

The question for us is, is that possible? And what role does sanctions play in that? The sanctions are emboldening the isolationists in Iran who are actually advocating that line and I think we're helping them in doing that through a sanction.

HAASS: This is coming back to your point. It's almost an anti-integrationist with our definition of integration.

MR. TAKYEH: Yeah, I mean, WTO has never been that big for them -- for particularly, the current cast of leadership. And you're quite right, they're trying to create their own -- what is often called, and one of the first individuals that articulate that, who's very popular in Aman Babel's (ph) circle, was Khaliboss (sp), who would talk about an Eastern orientation. And they're talking about Eastern orientation in terms of having relationship with Russia, India, China and so on and so forth -- Venezuela's one.

And that obviates the necessity of dealing with certainly the Americans, but quite possibly the Europeans.

NASR: I would put the caveat that the relationship with the East can solve many of the economic problems for Iran, but not some key ones. The Chinese and the Russians do not have the technology to rebuild Iran's energy sector and solve the larger problems that Iran has ultimately would require an opening to the West.

HAASS: Mr. Gelb, you get the last quick question, if you still want it. You don't have to have it.

QUESTIONER: Because everything we've heard all day ahs basically had a component in it of let's say as a minimum 50 percent chance that there's going to be some kind of military action. And underlying all of the conversations that, for a lot of people, raises big questions.

Having heard for the last two years and watching the council take quite a bit of time talking about the subject of soft power and the issue of the publics, rather than diplomacy only at the Ali Khamenei level and Condoleezza Rice level.

Is there any possibility that soft power is useful, productive or possible in a country where, as you put it, there is no interest in anything that would even remotely change the attitude toward the existing Islamic form of government?

MR. TAKYEH: Yeah. I mean, I always thought that one of the ways you can spend the democracy money, which has to be spent -- by congressional mandate it has to be spent in the year it was appropriated, I think -- is to have scholarships and so forth to bring people together outside nuclear science classes. I mean, that's normally bringing cultural exchanges, scholarships and so forth, as opposed to giving it to radio broadcasts. I know what radio broadcasts meaning the Europe-global communications systems -- satellites and so on and so forth.

That's one of the ways of bringing the two countries together. Is it going to solve your immediate problems on the nuclear issue, with terrorism and so forth? No. But it perhaps could help Iranians have a better understanding with the United States and Americans have a better understanding of Iran.

It's very difficult -- at this point, it's very difficult for Americans to go to Iran, because this is a country that has criminalized research. It equates research with espionage. So it's very difficult to do that at this point, but perhaps we can have greater number of citizens of Iran and in various American universities. That may have a good effect, it may have bad effect. Sayeeb Gott (sp) was here and he went back and became an inflamed Islamist. So I mean, you've got to watch who you're sending then.

NASR: I would just add one thing that, you know, the soft power -- in another sense, not just about Iran -- it's also about the region in which Iran is playing it's hand. First of all, there is the issue of Iranian soft power in an area that is of America's interest. And it's -- you could also think of, forget about Iran itself. We have to think much more smartly about what do we do about our soft power in the Arab world and the Middle East, in Pakistan and Afghanistan, which is the arena in which the Iranians are also playing and trying to exert influence.

And you know, the decline of American influence, the rise of anti-Americanism in the Middle East has not benefitted our policies -- not just toward the Arab world, but also towards Iran. And that's exactly why the Iranians can leverage this kind of bad behavior and translate it into political capital.

HAASS: With that, let me just do a couple of things. Let me thank these two gentlemen. As you can see now, I was not exaggerating when I said all those positive things about them.

Let me thank you all for your interest and your perseverance. Perseverance and interest, however, will be rewarded. There is a buffet lunch that is available precisely now. And I expect there'll be some hard food and soft food there for all of you. So thank you all very much. (Applause.).STX

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

RICHARD N. HAASS: Okay, why don't we get started. This is the third movement of the Iran concerto. I'm not sure it'll be allegro -- (laughter) -- but we will, we will see. With us are two of the leading thinkers -- just about anywhere, on the subject of Iran and U.S. policy toward Iran. We are fortunate to have them associated with the Council. We are fortunate to have them with us today -- Vali Nasr, Ray Takeyh. They need no introduction and, as a result, they will get none. (Laughter.)

The first session was on Iran's internal; and the second session, as you know, was on their nuclear programs, and all that. And when we get to the Q&A, I wouldn't be surprised if we returned to some of it -- obviously, there were questions on the Israeli angle, and all that.

But, what I really want to focus on in this last session is U.S. policy toward Iran, because early on in the new administration I would think that one of the first interagency processes of the 44th president will be to test this -- will look at the full range of our U.S. interest concerns, what have you, vis-a-vis Iran; and they will, basically say, do we want to change what we've been doing? If so, to what degree?

But if this were such a drill, or if this were a Council task, the first thing we'd want to do is at least make sure we understood what exactly was U.S. policy towards Iran. So, what I'd like to do is make that the first question, because it's -- I was part of the process for several years of trying to shape it, and so I know a little bit about it.

I wouldn't exaggerate what I know. But, let's just sort of posit what U.S. policy is before we then assess it; before we discuss ways we might change it.

So, Ray, How would you describe, now, U.S. policy?

RAY TAKEYH: Well, I would describe it as two policies. For some reason I don't think there was one. There's actually two. (Laughter)

First of all, there is what happens outside the region, and this has to be through a series of Security Council resolutions that, in and of themselves, don't have substantial coercive power. But they're supposed to convey to the Iranians a measure of international consensus and solidarity against a nuclear infractions, which establishes the basis for informal sanctions that have been inactive, outside the U.N., in cooperation between United --

HAASS: Can I just interrupt? I'm going to be really rude for a second. Before we start talking about the instruments of the policy, what do you think are the goals of U.S. policy towards Iran?

TAKEYH: I think, at this particular point, is to restrain Iranian power, constrain the nuclear program. But those are rather an amorphous aspect of this policy, so there's not that clear pronunciation of it.

And the instruments are, as I've said, they take place outside and within the region, trying to mobilize a regional consensus against expressions of Iranian power.

HAASS: That sounds then -- if the purpose of it is to put a ceiling on the nuclear enterprise, and to constrain or limit the spread of Iranian influence as a result of Iraq, that sounds a little bit like containment.

TAKEYH: Yeah. On the nuclear issue, I would suspect they would want Iraq to have no measurable enrichment capabilities, yeah. So, that's not restrained, that's --

HAASS: That's actually more than that.

TAKEYH: Yeah.

HAASS: That's actually a bit of roll-back in the nuclear area; and containment, if you will, in terms of -- would you buy that?

VALI NASR: I think actually it's rolled back everywhere. It's maybe only very recently that the administration has tried to calibrate its capability, vis-a-vis its goals, and it may have backed off to just try to constrain Iran. But the U.S. wants Iran out of Lebanon; wants it -- not only not come into the Arab-Israeli process, but eliminate all of its influence there.

The U.S. goal for much of the Iraq war was that the Iranians should leave. In fact, that probably was the tenor of the discussions between the U.S. and Iranian ambassadors. And, similarly, in Afghanistan, they quickly, after 2002 -- particularly after the Iraq war, the U.S. also wanted Iran out of Afghanistan as well. I would say -- (inaudible) -- sort of, a frame, is that for much of the past five years the U.S. has wished to go back to 2002. In other words, roll things back to before the Iraq war, as if the Iraq war didn't happen. Put Iran back in its cage; lock the door; and then hope that the regime would fall down. And then also take away their nuclear capability as well.

HAASS: Okay, so if one were going to posit that as the policy -- at the risk of asking a question to which I sense I know the answer, how well is it working? (Laughter.)

NASR: Well, I think -- if I may go first, I think that the main problem is that it was a completely unrealistic policy to begin with. It's a policy of maximal goals with minimal means. And the more -- very quickly, we overreached to a point that even the credibility of getting some modest results began to falter.

And we became very focused, if you would, on whether we were progressing on the nuclear issue -- whether the Europeans and the Russians were helping, et cetera, but in reality, we never managed to change Iran's position in Lebanon. In fact, after 2006, they became much more important

The Annapolis conference failed to eliminate Iran's role in the Arab-Israeli process. In fact, Iran now holds a lot of the cards, at least in the Arab domain. We never were able to force Iran out of Iraq. We've made some gains because of the new stability post-surge, but Iran is not gone. And, similarly, in Afghanistan Iran's presence is there.

And, in fact, the idea of even trying to build a united Arab front that is willing not to deal with Iran -- a Dubai that is willing to cut banking with Iran, a Saudi Arabia that's willing to cut ties with Iran -- none of that has worked. So I think, in some ways, I think the -- the first thing the interagency process has to do is exactly to, sort of, back away and calibrate 'what are our goals, with what are our means?'

HAASS: I assume you're not going to say the policy has been strikingly successful?

TAKEYH: The problem is there's -- as he was saying, there's no regional consensus on Iran. There has never been an Arab consensus on Iran. There was no Arab consensus on Iran during the war -- I mean, you know, Qatar was dealing with them, and so forth. So, attempting to craft a sort of a regional consensus, similar to the one that was done with the Soviet Union during the Cold War, is just impractical.

That has to do something with the way the U.S. allies in the Gulf behave, and so forth. And then we had tried to balance, and hedge, and so on and so forth, as opposed to take unequivocal sides.

HAASS: So, yeah, just to interrupt, to just -- a little bit of a detour; I didn't want to go here yet, but let me just do it. So, when people talk about the idea of Iran, in a kind of anti-Iranian -- to some extent, anti-Shiite, but more anti-Iranian power projection glue to U.S. policy in the region, animating everything from what we used to call "the peace process," to everything else, you'd basically think that's a nonstarter?

TAKEYH: I think it's possible to limit Iran's influence in the Arab East, in the Palestinian-Israeli-Lebanese context. If you have a successful peace process and some sort of mediation diplomacy, it is possible to eliminate the ingredients that lead to Iran to project its influence there. It's possible for Iran not to be a Mediterranean power, but I don't know if it's possible to make sure that Iran is not a Gulf power.

NASR: If I may add to that, I think the Iranians have calculated correctly that the peace process will not go forward sufficiently to really change the dynamic in the Arab world. And, in fact, the U.S. made a big mistake trying to hang its Iran policy on success of the Annapolis conference, and success of the Arab-Israeli issue.

Secondly, I think the Iranians have found out that this anti-Israeli, anti-Holocaust rhetoric plays really well on the Arab street, and it's the best way of blunting the anti-Iranian sentiment on the ground level.

And, thirdly, I think the Arab governments, particularly after 2006 and the NIE report, don't trust -- it's not that they don't trust our policy, they don't trust our competence. They don't think -- they don't want to bet their future, and the future of their relationship with Iran, on an administration who they don't trust can formulate an -- (inaudible) -- policy.

So, they're hedging their bets. It's not that they don't want to contain Iran, it's not that they're favorable to Iran, it's just that they don't trust that we're able to get what we want.

HAASS: Given what we heard in the first session this morning, to what extent should regime change play a part in U.S. policy? Or, ought this to, essentially, be jettisoned either because it's not going to succeed, or it gets in the way of what limited cooperation there could be in other realms?

TAKEYH: I'm not quite sure if there is -- if the problems that United States is experiencing with Iran are subject, or susceptible, to easy diplomatic solutions. Therefore, I think to make the U.S. policy one of -- sort of, ostentaciously a change of the regime, it defeats the purpose of any diplomacy.

However, I would actually differentiate between changing regime, democratization and human rights. I think any sort of a negotiation with Iran should have a human rights component to it, as was the case with the Soviet Union with the Helsinki process.

In that particular sense, what you say to Iran is 'You want to be part of the international community, there are certain norms of behavior that you have to concede to. One is civil society, activities, and so on and so forth; monitoring behavior of your human rights abuses.' I would think that's an important part of an equation to have -- and then sort of a negotiated settlement. For no other reason than it would drive them crazy, because they would object to that because of interference with their domestic affairs, and so on.

But, I don't believe that the United States can have negotiations with Iran without taking into consideration the character of the regime. That's different than the change of regime.

HAASS: But if the United States did that, two questions: Imagine we did that publicly. One, how would that play inside Iran? Second of all, would that cause problems in the region, because we would be holding Iran to some standards we, perhaps, couldn't hold some of our Arab friends to?

TAKEYH: Well, I mean, those human rights discussions take place with other countries as well. It's part of the negotiations we have with Egypt, the Saudis, and so on; and the Europeans who have just negotiated with Iran -- far more successfully than we have, have made human rights a part of the dialogue with the Iranians. And they have actually made some head-ways with that -- inspection of Iranian prisons, demanding the end of certain torture practices, and so forth.

The Europeans, who get sort of a blame for being mercantile and amoral, have actually been far more effective in pressing the human rights with the Iranians than the United States ever has. And in any negotiations that the United States has contemplated, human rights weren't part of it.

A lot of the conversation assumes that the United States and Iran approach things adversarially; there's a -- please turn off your cell phones -- antithetically, that there's no overlap. Let's challenge that for a second, because I was involved in some of the exchanges between the United States and Iran in Afghanistan. And actually there was some limited common cause.

And when I look at the situation in Iraq, for all of the differences between us, I also see that neither of us should oppose a -- more positive, neither of us want to see a country that hemorrhages; neither of us wants to see a country that fails. The United States favored elections. Those elections happened to bring Shiite politicians to power. I would assume, sitting in downtown Tehran, that was not an outcome that they had real problems with.

So, when one looks around the region, are there areas where the United States and Iran can and should cooperate?

NASR: I think, you know, what you say is very important in the sense that even if these areas of common interest are short-run, they provide the trust-building first steps that you would need in order to get to somewhere better with the Iranians. I think Iraq still is a place where Iran and the United States, by and large, are -- by and large, I would say, are on the same page, because they're both supporting the same government.

The Iranians are also hedging their bets, within the Shiite community, by supporting the Sadrists, et cetera. But the Iranians --

HAASS: Have they reduced that support recently?

NASR: Well, they don't have an option, because the Sadrists have been clearly downsized significantly. And that provides an opening. In other words, the only game in town for the Iranians, realistically, is the Iraqi government. It's the government that we're also banking on. Both the Iranians and the United States would want the Maliki government, or some version of it under a different leader, to succeed.

Our interests are the same as Iran in Northern Iraq, about which we don't talk. In other words, the stability of the Talabani-Barzani regime, and their -- and at least some kind of a agreement about the shape of Northern Iraq that would be conducive to Iranian interests.

Around the corner, when the next administration comes out, the big issue would be the Taliban. And Iran was the one country in this region that supported the Northern Alliance, along with India, as you know, against the fight with the Taliban. Again, a strategy of dealing with Afghanistan's stability -- working with the Karzai government, dealing with the drug issue, invariably, Iran and the United States are going to find their points of common interest.

And the third issue is the whole issue of the Caucasus, energy, gas pipelines and Russia. In other words, the way the United States is beginning to think about that region -- namely, how to create energy independence for Europe from Russia, cannot work without Iranian cooperation and participation. And, so you know we may not have enough to think of a fruitful, long-run relationship, but we have enough to at least begin to think of a different kind of engagement.

TAKEYH: The issue of Afghanistan is a peculiarity, because Iranian-American interests in Afghanistan have always coincided, since 1979. And they have never led to a larger cooperation between the two states. They cooperated -- they had the same objective in expelling the Soviet Union in the 1980s, preventing the consolidation of power by Taliban in the 1990s, and the displacement of Taliban in 2001-2003 period. That has never led to a larger cooperation between the two countries. That's one of the diplomatic peculiarities of Afghanistan-Iran-U.S. nexus.

On issue of Iraq, there's a larger agreement between the two powers preventing Iraq from being territorially dismembered; having a diplomatic process -- democratic process that leads to a rise of the (Shiites ?). But between that, and below that, there's all disagreements. Iranians want American forces out of Iraq -- not as precipitously, but out of Iraq. Iranian goal of emerging as preeminent power in the Gulf cannot be sustained so long as there's a sizeable contingent of American forces in the Gulf, whatever their preoccupation.

The relationship with the Sadrist movement is changing. They have a relationship now directly with the militias, or the breakaway militias, special groups, whatever they're called. So there is some degree of disagreement and friction at the ground level, which tends to undermine the larger conceptual agreement between the two powers and the direction -- overall direction that Iraq should go.

HAASS: Has there been, though -- or has there not been some backsliding, if that's the word, between -- involving Iran and the Taliban? My own sense is, whereas in the past the Iranians were quite -- if not unalterable opposed, overwhelmingly opposed to the Taliban, one gets the sense that, somewhat cynically, they've decided the Taliban are a useful instrument?

TAKEYH: Yeah. Sufficiently empowered, but not dramatically so, they can be used as an instrument of inflicting pressure on the United States.

NASR: But I also think that the Iranians are also hedging their bets with the Taliban. I mean, it's the saying that, you know, Ahmed Rashid used to -- liked to say that every shopkeeper in Kabul believes the Taliban are winning. I think the Iranians don't want to end up in the same situation with the Taliban as they were in 1997-98.

It's -- the best time now is to buy their friendship, so you don't have to see the short end of the stick when they arrive in Kabul. Which I think, again, goes back to not just our friends, but also even Iran. There is a belief in that region the U.S. is incapable, essentially, of seeing its policies to fruition. And that allows people, or pushes people to hedge against us, which is not very useful.

HAASS: Which tends to be self-fulfilling.

What is current Iranian thinking vis-a-vis terrorism as an instrument? And has there been any evolution or change?

TAKEYH: Iranian terrorism, it's customary to suggest Iran is the most ardent supporter of terrorism. But, if you look at their terrorism portfolio over the years, it actually has shrank. Part of the Iranian terrorism portfolio was assassination of dissidents abroad. That has stopped. Now, maybe that's because there's not that many dissidents left abroad -- (laughter) -- but still, that has stopped.

So their principal expressions of terrorism, as we call it, would be a support Hezbollah, would be support of Hamas, and whatever they're doing within Iraq. Within that, I think their relationship with Hezbollah is so organic, and is so fundamental to the character, and identity and foreign policy of the country that I don't see that changing. Hamas may be a little different.

HAASS: Why is that -- for a second?

TAKEYH: Hezbollah -- Iranian -- the relationship between the Iranian Shi'a community -- clerical community, and Lebanese Shi'a community, actually predates the revolution. Their relationship that has been mended through seminaries, consolidated through marriage, and Hezbollah has emerged as a successful protege of Iran, particularly in the aftermath of the 2006 war. So, in that particular sense, Hezbollah gives Iran a reach into the Arab piece.

HAASS: Why, when we talk about the Israeli-Palestinian process, or Lebanon, and so forth, why are we talking about Iran? It has no borders. It has no ability to project power in that region. It's because it has these proxies, particularly in terms of Hezbollah, that it can gain it.

Second of all, Hezbollah --

HAASS: Just so I understand, though. When the Iranians deal with proxies such as Hezbollah, is that then because they are seen as useful instruments of projecting and expanding Iranian power? Or is it seen more, because of the Shiite dimension -- it almost reminds me of the debate we used to have about Soviet power versus the spread of communism.

TAKEYH: The reason why that relationship is so important is because it's a marriage of strategy and values. It serves both ideology and tactics. But also, Hezbollah allows Iran to leapfrog over the sectarian divide.

I mean, Vali talks about the, sort of, the rise of Shi'ism, and the Sunni-Shi'a divide. I mean, what is a Sunni-Shi'a divide when Hezbollah flags are flying in Cairo? So it gives you an appeal, to a larger Arab public -- "the street" that he's talking about.

NASR: If I may recite an anecdote. In the morning Ali Ansari was talking about the growth of hand-kissing in Iran. Hand-kissing began with Hassan Nasrallah kissing Khamenei's hand. He's the only Shi'a leader around the world who actually kisses Khamenei's hand. So, that has value too, you know. (Laughter)

HAASS: Hard to quantify. (Laughter.)

There's lots of people that think -- or some people think that, whereas Israeli-Palestinian talks are, shall we say, problematic in the extreme -- for a whole raft of reasons, including the weakness and divisions on the Palestinian side, but Israeli-Syrian talks have slightly better prospects. Would Iran try to stop that when -- and could they? Imagine you did have a situation where the next Israeli government was prepared to try to strike a peace deal with Syria, and Assad was as well. How would Iran approach that?

NASR: Well, I mean, so far the Iranians have not been favorable to the talks, and have publicly criticized Syria. And I think the main sign of the breach is the assassination of the Hezbollah terrorist Imad Mughniyeh, which both Hezbollah and Iran believe was the olive branch that the Syrian intelligence gave to Israel as a sign of goodwill. There's a lot of bitterness about that.

But the Iranians probably figure that it's going to be awhile before there is a peace treaty. And for Iran, I think everything right now is about the next quarter, not the next quarter century. And, you know, the Israelis probably -- they have elections, they're not likely to give enough to Syria to seal the deal.

Iran also has enormous amount of direct foreign investment in Syria. Some say upwards of $8 billion have been invested in Syria. You have a lot of common ground in Lebanon. Syria cannot manage Hezbollah without Iranian help. Israel cannot turn Syria on a dime. At best, you know, the idea of a peace treaty between Israel and Syria is a backing away from war, and probably a, sort of, a cold peace between them.

But even that, I think the Iranians think is not in the immediate future. So, they don't see the real strategic map of this region changing dramatically -- say, in the next six to eight months, which is really critical for them in terms of whether or not they're going to be somewhere else with the United States.

HAASS: Only in the Middle East is facilitating an assassination seen as a sign of goodwill. (Laughter.) But, I will let you all ponder that for some time.

Okay, so you have a new administration in Washington in place. It's the spring of 2009. People at the senior level have been confirmed. Some of the initial reviews have been launched. And when one looks at the question of U.S. policy toward Iran, for a second, what is the relationship between our previous session -- the emphasis on nuclear, and everything else, to what extent does that -- should that dominate?

And even beyond that, to what extent should the United States try to impose linkage in its relationship with Iran? Or should it basically say, every boat on its own bottom. If we can make progress in the nuclear, great, and if we can't make progress, at the same time, on terrorism, so be it. How should the United States approach its relationship with Iran?

TAKEYH: I mean, Ash touched on this in the previous session. I think when you were talking about limited negotiations over arms controls issues, or larger negotiations where arms control would be a component of a larger context between the two countries, I suspect, that's the best way of approaching it, because I think there is a conceptual divide between Iran and the United States on the nuclear issue.

And Iran and the international community on the nuclear issue. Iranians look at negotiations as a means of offering confidence-building measures so they can proceed with a nuclear program. The United States looks at negotiations as a means of stopping their nuclear program. So, that conceptual divide, I don't know how it's going to be bridged.

But perhaps in the larger context of negotiations between the two countries that deal with stability of Iraq -- Gulf security, diplomatic and economic sanctions, frozen assets, Hezbollah, and so forth, maybe you can make some progress. Now, if all these issues are linked, then that's the formula for paralysis.

HAASS: But just so -- but just so I understand, does that mean the United States has two baskets of sanctions? One is a basket of sanctions we'd either raise or lower, depending upon the nuclear issue; and the other is a basket of sanctions we keep in reserve for everything else?

TAKEYH: No, I'm not suggesting that. What you're trying to do -- essentially, some of those sanctions will have to be modified over time anyways.

One of the easiest things the United States to do is to deal with the frozen assets issue, which would be, symbolically, even very powerful; the diplomatic recognition issues, or moving towards establishment of diplomatic recognition. But that's the complexity of these negotiations, is how much of your grievances with Iran are you willing to live we?

At the end of negotiations, you should be prepared to enter a period of ambiguity, where none of these issues are resolved conclusively to anybody's satisfaction. How much of a Iranian nuclear program can you live with? How much of Iranian influence are you willing to concede in Lebanon? How much of an Iranian presence is acceptable in Iraq?

And if the answer to all those questions is "none of the above," then I wouldn't actually suggest negotiations, because then you're trying to get to negotiations what you couldn't get through containment and coercion.

NASR: I would not disagree with Ray, but I would think that with a new administration there is a framework problem, in a number of ways. One is that we have an Iran problem, and we see it essentially just as a nuclear problem. Every discussion begins and ends about, 'what are we going to do with that.'

But I think it's a much bigger problem. And I think it's -- I went back to your introduction this morning, that it's not possible for us to get the greater Middle East right unless we properly understand the role of Iran in the region. Then, you know, we have to sort of approach this thing completely differently.

And I think the Iranians look at it this way; in other words, the nuclear issue, for them, is a lever to changing their whole status in the region. I think one of their strategists said that either this issue will solve absolutely everything between the United States and Iran, or there's no point even talking about it.

And I think, you know, it might be the case that it's too late. That, for so long, the United States has made this only about suspending enrichment and ending the program; that we, sort of, have gone so far down this road it's very difficult to come back from. But unless we find a way to broaden the Iran issue, in the context of our understanding what's happening in that region, I think we're not going to get it right.

HAASS: But, let me just sort of, play that out for you, just so I understand. If you thought of the U.S.-Iranian negotiation as one of, for want of a better word, "multiple baskets" -- you have a basket called "nuclear," you have a basket called "human rights inside Iran," you had a basket called "Iraq," one called "Afghanistan," one called "Lebanon," one called "Hamas," whatever, "Hezbollah," "terrorism." If you had 10 baskets from, you know -- and maybe "assets," and some of the baggage, if you will, left over from the last three decades.

Imagine you started talks on the nuclear, and couldn't make any progress there. Do we deny ourselves leverage? Is that the right way to think about it, if we still go ahead on the other baskets as best we can? How is it we ought to structure these talks, because it seems to me we have to think about leverage; we've got to think about priorities; we've got to think about what might influence Iranian behavior, more so before we do something about flying out assets.

What do we link? The flowing out of assets? Or do we simply say, here, have it. We're going to flow out some assets in the hopes that, therefore, you reciprocate? How do we structure? How do we think about this?

NASR: Well, you know the way it's been figured is that the nuclear issue is on the forefront. First of all, it's been there; secondly, because there is a very tight timeline attached to it. You want the Iranians -- if we can intervene in the program before they get too far ahead, as both Ash and Gary mentioned.

But I think, you know, the idea of talking with the Iranians about everything at the same time may not be the best approach, right. I mean, they might have to sequence it. There are things that we are closer with, and it's possible to get at least a certain modicum of agreement on faster, and build trust that then would be parlayed into the --

HAASS: For example, what do you see as some the lower hanging fruit?

NASR: I would say still Iraq, Afghanistan and the Caucasus as probably lowest hanging fruits. I mean, it's possible for us to have a different kind of a discussion on Iraq. I don't think we've been talking to Iran in Iraq at all. The two ambassadors meet to give each other demarches. You know, a list --

HAASS: They're not even meeting.

NASR: -- they don't meet anymore at all. But there isn't -- there is no fruitful engagement of looking at what are each other's interests, and how they can have a constructive view of supporting the same goal in Iraq.

We could have a similar kind of a framework about Afghanistan. We actually had it. Not only at the Bonn conference, but actually for the one year or so after Ambassador Khalilzad was in Baghdad he would meet with his Iranian counterpart and it wasn't worth beans. And they got a lot of things done before they went to Loya Jirga.

One of the dilemmas we have is that, actually, the most difficult issues, that we are farthest apart, are the ones that are on the forefront of the Publican (ph) and the policymakers in the United States. And they completely overshadow where we could actually be gaining things.

And I think, you know, we also have to have a long-run game plan. I mean, is the aim only to mitigate Iran's worst behaviors in multiple arenas, and then leave it alone? Or, do we have -- as it was the case with China, a grander strategy of bringing Iran in from the cold? But if our aim is really to -- is not just fixing one, two, three, four things, but really changing the profile of that country, then I think we need to think about the sequence of things that get us there a bit faster.

HAASS: Do you think what you were describing -- to use my language -- I'd say integrating Iran?

NASR: Exactly.

HAASS: Is that -- what's your sense of it? Is that a pipe dream? Do you think that's a real option? Are you thinking in terms of years, decades, generations? And if you are thinking about it, is there a sequence that you would say here's how to do it or how not to do it? I mean, is this a -- I mean, because it was the U.S. policy, in some ways, towards China. There's been elements of it towards the old Soviet Union, to some extent with Russia. Is this a realistic option, given the nature of the Iranian regime and its own foreign policy goals?

NASR: I think it's a difficult process and it's not going to be quick, but I think at least beginning the process and setting the mechanisms in place is not that unrealistic. And I think, in fact, if anything the sanctions are probably the single biggest negative here, because closing Iran to the world economy, reducing the leverage that Europeans, Americans have within Iran, reducing relationships between Western and even regional business communities with the areas in Iranian government, civil society, business community that would be supportive of that change is not actually beneficial.

So I think a policy of isolating Iran is not going to help integration. In fact, one of the most important outcomes of the sanctions has been a much more aggressive turning towards China within varieties of economic sectors in Iran. And that only will in the long run make this much more difficult.

Iran is deeply integrated into the Middle East structure. It has security projections all over the place. Its trade with Europe has gone up -- 17 percent with Italy, 30 percent in France, Germany. The only country whose trade has declined with Iran in European countries is actually Britain.

The level of trade with China and Russia is deeply increasing. I don't know what -- the United States -- does the United States have a key to Iranian integration in the era of global economies? So Iran is not a country that's isolated like North Korea is. I mean, you can't a bank loan from UBS, but they seem to be doing okay nevertheless.

So it's important to recognize that we might not have the keys to preventing a country whose principal export is a commodity that international economy desires and relies on can be integrated or disaggregated from the international community at our will. That is not potentially a leverage that we possess.

The leverage that we possess is having an understanding of the Iranian government that has, in my view, re-conceptualized its national interests. It doesn't even use national interests as necessary economic gain, but security advantage. It's a security driven -- its principal goal is to increase its power and influence in the Middle East. And that is potentially a leverage that you possess in terms of integration of Iran into a security structure of the Middle East.

HAASS: Well, let me just press you on that. What is the --

TAKEYH: Please don't! (Laughter.) I don't understand you, really.

HAASS: Since you don't understand what I mean, I don't understand what you mean. And one of the interesting things you've got to do in diplomacy is figure out not just how much things matter to you, but the value you believe they have for the other side. And usually in negotiations, the marketplaces are not equal.

TAKEYH: Yeah.

HAASS: There's a dis-equilibrium between, if you will, between the two marketplaces.

So what is it that Iran would value most? Is it, for example, some sort of an American security insurance -- conditionalized it might be. What is it the Iranians are looking for -- or is it the assets, is it diplomatic?

If they were having this conversation, how would they structure their list and what is it that they care most about from us?

TAKEYH: I don't believe they're looking for security assurances. As a matter of fact, they openly scoff at the idea of security assurances. No country predicates its security on assurance of its adversary. France and Britain achieved independent nuclear capability irrespective of security assurance from an allied country. Nobody bought the idea that we'll put New York at risk to save Berlin.

So if an ally country doesn't believe in that, how do two countries with deep-seated --

HAASS: Actually, the Soviets did, but that's okay.

MR. TAKYEH: So how did that affect countries which are adversarial to one another? So let's put that aside.

Security assurances is different from a security dialogue between the two countries. I would say, at this point, there's a debate within Iranian security establishment, as I understand it. And the debate on one side are those who believe that Iranian preeminence in the region can only come about as a result of confrontation with the United States. It's a prize to be achieved through confrontation and defiance and what they call confrontational diplomacy.

And then there are those who essentially actually subscribe to Shah's ideology, that the only way Iran can become a leading power in the Gulf is through a different relationship with the United States. That American power might be declining, but they can still be a potential barrier to Iranian resurgence. That is the debate.

Now, the way you impact this particular debate is for the United States to become more active diplomatically. It may not work, but I think that's where it -- that's where I would situate the debate.

NASR: I agree. And I think you can also partially, for sure, what price -- what is the value of what Iran has gained since 2003 to the regime and this issue of security. I think, you know, ultimately the only assurance we can give in security is an American embassy in Tehran.

HAASS: So they can take it over! (Laughter.)

NASR: No, I mean -- but in reality, in other words, the security assurance will not come in terms of any kind of a guarantee. It means when you have a relationship with another country, you would feel more secure than when you don't.

So I think, you know, that's why exactly that's where Iran ultimately could give up the nuclear power. It's not a matter of just a few carrots and a few sticks. It wants a completely different kind of relationship with the United States.

Secondly, I do think there is a lot of value to what Iran has gained in this region for it -- whether or not it intended to make these gains; whether or not it's the U.S.'s fault -- but Iran is staking a lot of its political capital in the region and domestically on maintaining its position in Iraq, in Afghanistan. The entire risk they're running by a very aggressive anti-Israeli policy in order to pacify the Arab world or to have Ahmadinejad the number one in a poll by Al-Ahram in Cairo.

These all suggest that they look at this very -- as something they want to keep. And you can see it even among the most pragmatics in Iran would say, look, the only country that's ever invaded Iran is Iraq. And the only aggressive attack against Iran in modern times has come from that neighbor. Iran has to be in Iraq in order to protect itself. The defense of Iran begins in a forward position in Basra, in a sense. And therefore, even they are arguing that Iran cannot be excluded from Iraq. It wants to maintain that position.

So I think, you know, if there was absolutely successful negotiations between Iran and the United States and they really solve all the problems, I think where I would differ with the Bush administration -- the Bush administration thought that the result would look like 2002 and Iran would agree to leave Lebanon/Palestinian issues, Iran and Afghanistan.

I think if we're really successful, the result would be a recognition of Iran's position in this region, that they will be invited to the next Palestinian conference; they will have a say in who's going to be the president of Lebanon; they will -- you know, one of the reasons they want us to leave the region is because that's part of this reality -- that they will actually have a say in the future of Iraq, formerly, and also of Afghanistan. That they will look a lot more like the Brazil or the China or the India of this region than merely one of the 20-some countries in the Middle East.

So I think that's something to negotiate with them.

HAASS: What'd be in it for us, then?

NASR: Well, what would be in it for us is the facts -- we've begun this discussion by believing that the fact of Iranian power is something bad. Iranian power in this region is not bad in and of itself. It's only bad if it's working against us. In other words, we didn't have a problem with the shah owning the Persian Gulf when we didn't have a problem with the shah.

Our position's very different from the Arab world. The Arab world really doesn't care about the Iranian regime. It cares about Iran. It's inherently anti-Iran. It would have a problem with a democratic Iran asserting hegemony; it would have a problem with an Islamic republic asserting hegemony.

I think if the United States can arrive -- the end result of this discussion would be that the United States ends up getting many things that it wants; that Iran's presence in this region would not be disruptive; that if it gets a role in Lebanon and Palestinian issues and Iraq and Afghanistan, it wouldn't be standing out there throwing stones; that it will not destabilize governments around it; it would not support subversive regimes; it will not promote and export revolution. And potentially, even, it will sort of solve the security functions around the Persian Gulf so we won't have to have 180,000 troops and two aircraft carriers for an indefinite time period in order to deal with this region.

I mean, the main gain for us is reducing a very expensive and undesirable security footprint in the region. And also being able to bring Iran from where it now to a different base. The price for it is the price of a much more influential Iran. Now, the dilemma we have is that the Arabs won't go along go with this.

HAASS: To say then on your statement -- to deconstruct, though, what you said, which is in some ways accepting -- I don't know if the word is the institutionalization of Iranian power -- something along those lines -- implicit in that, to use Kissinger's writing about Germany in a very different context in the late 19th century, that Iran is conceivably not a revolutionary power; otherwise, why would we want in any accept it or institutionalize it? And that any conversation with Iran cannot be narrowly nuclear only.

But implicit in what you're saying, it seems to me, is an Iran -- the project of Iranian power is not only bad; and second of all -- indeed, to some extent could be good; and secondly, we are looking, if not a grand bargain, at least at a very broad conversation with Iran.

NASR: Exactly. I mean, Iran -- I agree with Ray. Iran can go down different roads. It can go around the road of Japan of 1930 or it can go around the road, which is much more constructive: the road of India. And I know even we had this discussion that, you know, if Iran goes with -- gets the capability, even short of ever using it, it can become a far more aggressive country.

That, I think, is a very distinct possibility. But it's also possible that Iran may behave a lot more like India after it got the bomb. It relaxed; it began to turn its attention to other things. And the key question is that some of these issues are fluid at this point in time. And I think Ray's absolutely right that these debates within Iran are very -- are ongoing. And part of the whole use of aggressive diplomacy by the United States should be to try to somehow interject ourselves in that debate, to have a say in which direction Iran would lead.

HAASS: Let me sort of ask, then, one last question to get operational for a second.

As I listen to you then, one of the outcomes of the inter-agents review about what happened in the spring 2009, I would assume would be that you would want to see is quite possibly a more active American diplomacy with Iran, even an Iran coordinator or envoy, but one who had a very large set of issues in his or her pocket -- not a nuclear-only envoy, but essentially a nuclear-plus envoy that would be free to raise virtually any bilateral or regional or even global issue. So is that about right?

TAKEYH: Currently, that's only the political directors for Europeans and Iranians. So it comes, you know, technically it comes to that office. So if you want to begin with an envoy, you have to disturb that configuration.

What Vali was trying to suggest is can you -- and I don't know the answer to that -- can you concede to an Iranian hegemony and turn it into a force with begin power, which essentially was the U.S. policy during the shah of Iran? Was that right, to some extent?

HAASS: Why would it have to be hegemony? Why couldn't it simply be significant Iranian influence? Hegemony -- the idea that the United State would concede hegemony over this, by the way, seems to me a nonstarter. It may not, however, be possible to exclude Iranian power.

So the real question is on what terms should the United States be prepared to countenance Iranian power?

MR. TAKYEH: There's a differentiation I would make between different parts of the lease, is the policy can probably work in terms of having greater cooperation or security issues in the Gulf and Iraq -- although that comes at the price of intense allied management, but there'd be some Gulf security and Gulf countries that will object to that.

I think in terms of the Arab peace, in terms of the Lebanon and the Palestinian area, our interests are divergent, because the actors that we want to disarm and marginalize -- Hamas and Hezbollah -- are those that Iran sees as necessary for its influence to their power. So I don't know how you bring Iran into a discussion on the Israeli-Palestinian-Lebanese peace process over vociferous objections to begin with of the Israelis. The invitation of Iran to Annapolis would be kind of difficult, given the fact that they came on the heels of a country that held a conference denying the Holocaust.

I mean, that's -- you know, I can see -- in Lebanon -- I can see a discussion between three powers in Lebanon. You know, Iranians had a diplomacy toward Lebanon. They wanted to mediate the civil war in Lebanon in conjunction with the Saudis and two countries objected to that: Syrians and the Americans for different reasons.

(Cross talk.)

NASR: No, let me put it this way: This is why I think the word "hegemony" and the way we look at it, by the way, is very important. The Iranians may want to go in this to protect hegemony, but in a successful negotiation they will come out with something far less. And I think the model is probably India.

I mean, we at some point tacitly accepted that India will be the prima center part of the dominant source in South Asia, and that the United States will stop trying to prop up Pakistan to continue to challenge India's position. And you know, by and large, India's not hegemonizing the region, but it's a recognized fact that, you know, it's the dominant force in the region.

I think, you know, the points that Ray raises are correct, but that's all because we cannot come to these issues without having a framework to begin with. We cannot all of a sudden invite them to Annapolis or begin a discussion with Lebanon when it's not part of an overall framework of where we're going with Iran.

And I think, you know, before getting into -- I mean, the first thing I think in a new administration, if it's serious about such a vision, is not to come up with mechanics. But it has to be sort of a declaration from the stop -- a statement of intent that, you know, that is where American position on the Middle East and American view of Iran is going.

And I think, you know, that's not going to come without having to have serious back channel discussions with Iranians to sound them out; to, you know, to have also elicit, if you would, sense of whether you were going to have a partner in figuring out these negotiations. The negotiations are going to be difficult enough.

HAASS: I would think, for what it's worth, the most you're going to get is a statement that indicated American conditional readiness -- emphasis on the word "conditional" -- to accept certain projections of Iranian power, dependent upon how Iran were to exercise that power, whether we saw it as constructive or destructive.

And I think the biggest intellectual question for the new administration won't be mechanical. It will be conceptual, as it always is, which deal a lot with the question of linkage and to what extent the United States is prepared to disaggregate, if you will, the Iranian challenge; or to what extent, in particular, we would require that the nuclear issue be settled as a -- I don't want to say precondition, but as a necessary element of a larger relationship.

Put another way, whether it's possible to conceive of a better U.S.-Iran relationship absent satisfactory progress in the nuclear realm.

MR. TAKYEH: Well, you have to define what "settled" means.

HAASS: Well, exactly. And that's, you know, one of the questions and obviously, there's a range of views.

Okay, since we resolved everything, we're going to open it up now. And again, this is the last of the sessions, so I think a lot is fair game, whether it's narrowly on what I've been trying to pry these two gentlemen are or not.

Sure, Ken.

QUESTIONER: Thank you.

First of all --

HAASS: Introduce yourself.

QUESTIONER: My name is Kenneth Bialkin.

First of all, I'd like to say this has been a fascinating discussion. I'd like to congratulate you, Richard, for provoking a discussion that has helped many of us focus ourselves on issues that we've been thinking about. Perhaps the discussion has been very helpful in helping us direct our long views and I thank you very much for that.

In listening to the discussion, however -- and you raised the question of interagency review in the next administration to see what the policy toward Iran ought to be -- I'd like to start with the abiding question of do you think the approach to that interagency review would precede from the same basic assumptions, irrespective of which candidate, McCain or Obama, gets elected? Is that review likely to be independent of expressions so far seen at this stage of the campaign by each of the campaigns, or will that review be preordained by policies already in place?

I took it from the debate that both speakers, to a greater or lesser extent, advocate diplomacy, engagement and discussions with Iran on trying to find those areas where you can find a middle ground, while at the same time ignoring their fundamental precept -- namely that it's an Islamic republic; it is run by a theocracy; it is an absolute policy, grounded in certain radical views of the Koran, which is sustained by the forces of terror.

And the present administration --

HAASS: That's -- you've got to --

Q -- takes that view and the present administration would follow the advocacy of the two of you in various forms, with the label of a appeasement.

HAASS: They call it -- (inaudible).

QUESTIONER: I would call it appeasement. (Laughter.) And maybe a different view is proper, but isn't your advocacy of engaging Iran, as though they did not have the fundamental precepts expressed by Ahmadinejad and the supreme leader -- can we afford to ignore those statements and make believe it's business as usual and is that appeasement?

NASR: First of all, I think, you know, even the policy of not talking to our enemies, we already got over that in Iraq. We talk to plenty of people, you know, who are shooting at us and we renamed a lot of the terrorists as sheikhs and they're not on our pay.

Certainly I would say that, you know, the Iranian regime, without a doubt, has an ideological component in it. And in many ways this is not unfamiliar to us. We dealt with the Soviet Union as well in periods in which its leadership -- or with China -- had very, very restricted and ideological views of the world. When the United States engaged China, the Chinese were hardly a moderate leadership then. They had killed millions of their own population in a cultural revolution.

Diplomacy does not mean throwing the towel in with the Iranians. If you looked at the current situation, war doesn't look good. As we saw in the last panel, it may not even get us what we want. It's very clear that in all quarters of the United States, the current situation is unacceptable as well. In other words, that the Iranians would continue to build centrifuges and snub their nose at the United States.

Well, the only alternative really remains is that how can you -- you need to try something that you haven't seriously tried. And I think that diplomacy off the bat has a game-changing quality, because if nothing else, it will throw the Iranian game plan into a tizzy. The Iranians have been operating on the basis of assumption of the past -- on the past six years. That this administration is not serious about talking; it will not talk. There's no point talking to it. And at the same time, it's increasingly toothless. It cannot do anything militarily either.

And if there is a serious engagement with Iran, which doesn't mean giving in, but is a serious engagement, the Iranians would have to calculate things differently. I mean, there are voices in Iran which often say, you know, put something on the table that will create a breach between the Iran people and its regime; put a deal on the table that would actually much more open up the debate that Ray talked about.

None of that we have tried. I mean, we have not really seriously contemplated what uses diplomacy can have for all purposes -- not to please the Iranians, but to get suspension, to get to getting a change of behavior in arenas that matter to us.

HAASS: We've got lots -- Ambassador Murphy.

QUESTIONER: I'm wondering what do you believe has survived of Ayatollah Khomeini's interest in Islamic world leadership? And what the present leader -- what priority the present leaders give to the Shi'ite-Sunni rivalries, and in that connection, what has been their reaction to Rafsanjani turning up with King Abdullah in an interfaith conference and hands across the Shi'ite-Sunni divide? How seriously do they take that sort of activity?

MR. TAKYEH: The Iranian policy since 1979 was never to describe themselves as a Shi'a power. It was always an Islamic power. The Iranian model of governance had relevance beyond the Shi'as. It was the Saudis and others that called them Shi'a in order to (ghettoize ?) them, put them in a corner and prevent their influence. So there's always been a more of a pan-Islamic aspiration and that has sustained itself.

I have a different view of the Iranian leadership, maybe than Vali and others do. Mainly, I think the number of people that are involved in actual decision-making has lessened over the years. That's what Ali Ansari was saying this morning. I would differentiate between a governing elite and a political elite. And the governing elite have lessened and there is a lot of political elites.

And what the governing elite brings to power is a combination of ultra-nationalism or what Ali would call vulgar nationalism and still a tinge Islamism. And the Islamism is what defines and actuates your opposition to Israeli-Palestinian accord or leads you to cast aspersions or deny the legitimacy of the state of Israel. So there's an Islamic component that still conditions Iran's international relations. I don't believe the Islamic Republic's international relations can be entirely similar to that of the Shah, which was not necessarily dealing with the religious complexion of its antagonists and so forth.

So it's always going to be a state that is somewhere between pragmatic definition of national interests and revolutionary values and it's always going to have that dispersive component to it, which makes it an infuriating negotiating partner.

HAASS: I've got about a dozen people. So if you'll be succinct, and I'll ask my two colleagues here to be succinct, we'll get as many of you as we can.

Given the picture you've already given us of U.S. interests and U.S. policy, what do you think U.S. policymakers think they will be accomplishing for both an overt Iran democracy fund set of activities and through what are reported to be the covert operations that supposedly secret presidential findings have begun stepping up? To what extent is there something of a "hail Mary" pass to regime change in is? Or is it simply a way of trying to get leverage? To what extent can it be productive or counterproductive?

MR. TAKYEH: You know, I have to confess, I don't know about the covert stuff. I read what I read, unless you have the ethnic -- Iran is an ancient nation whose boundaries are largely intact. It is not an amalgamation of kind of ethnic groups put together by British mpireans. So it's a different country in that sense.

I don't know at this particular point. I mean, Condoleezza Rice has said many time that our policy is not regime change, it's regime behavior. The problem is they don't believe it. And will they believe the successor as easily? This is a political leadership, as Vali was saying, that lives its conspiracies. So to some extent there is a degree of mistrust that they bring to the table which has to do with their own experiences and their own upbringings and their own kind of calculations that are unlikely to be mitigated by American pronouncements.

HAASS: Liz Chatter (ph).

QUESTIONER: (Off mike.)

HAASS: The microphone up front.

QUESTIONER: I was struck by the comparison that you made in terms of the India model. And I would suggest that there were decisive shifts in India's policy, without which a good relationship between India and the United States would not have been possible. And there were really, you know, serious compromises besides structural changes. You know, the collapse of the Soviet Union, rise of China, created very compelling reasons to see certain kinds of convergence.

So I was just wondering where is it that Iran can shift its policies to come some distance to meet the United States to make such a positive -- (inaudible)?

HAASS: And in particular, could it happen with oil at $120 a barrel or would we need to see oil at $80 or $60 a barrel to see the Iranians maybe rethink their worldview?

NASR: Well, I mean, it's useful to talk about India or China, et cetera, as sort of general ways in which we can imagine the future. They're not identical in anyway.

Just as, you know, India began to shift its position requiring economic changes that came after a period of economic downturn, it also had a major change internally when the DJP came to power with a very different idea about foreign policy. And also, you had the collapse of the Soviet Union. There's no doubt that the neighborhood in the Middle East has drastically change. And that in itself has opened certain possibilities. Oil is, obviously, a very important factor.

But I think, you know, thinking about this issue, you have to think that the Iranian leadership looks at everything in a cost-benefit analysis. The problem, I think, is not so much of, you know, whether or not to make a shift, it's that the cost of the very first handshake with the United States is extremely expensive for Iran. It loses all of its position in the Muslim world as the leader of the rejection front; all of the political capital that it has on the Muslim street. And therefore, it evaluates the policy shifts that it makes in light of what it's going to gain as a consequence of what it's going to give up.

And in the mind of that leadership, I think, it's so vested in this entire political capital that it gets from it being the bad boy of the Muslim world and the Middle East, that it has to think that it's going to get something that is very fruitful.

And in fact, going back to that first question, if the United States wants to think, what is the one of the major benefits that it gets from brining Iran into some kind of an engagement, is that it would have a major impact on that aspect of politics in the Muslim world and the role that Iran plays with it.

HAASS: Bob Nisan (sp).

QUESTIONER: In this interagency discussion and back channels and all the rest, and what Ray said, how do you know to whom to go to start this discussion? Who has the power to deliver? If you talk about the political front doesn't and the religious front does, and to whom do you go and how do you start and which backchannels do you go to?

MR. TAKYEH: Javier Solana negotiates regularly with the secretary of Supreme National Security Council, which at this point is Saeed Jalili. He was recently elevated as not just a presidential appointment to that council, but also a representative of the supreme leader. That's a port of call. And he's sort of way out there in terms of his ideology. So that's the port of call.

HAASS: Allan Gerson.

QUESTIONER: Allan Gerson.

You may have answered the question when you talked about the costs that Iran calculates that would be involved in a handshake with the United States, but at the end of the last session there was an intriguing point made for the floor. It was suggested by an individual that watches Iran closely that what the Iranian leadership really wants is recognition by the United States -- or they it's on the top of its list -- and the opening of diplomatic relationships, not withstanding its commitment to confrontational diplomacy in certain quarters.

So my question is how important is it to the Iranians to have recognition by the United States and diplomatic relations; and if it is important, how does U.S policy leverage that?

HAASS: That's almost the opposite of the argument that its less of a cost for the Iranians than it is, if you will, a benefit to have an open dialogue with the United States. Which is it?

NASR: Well, every policy or every decision the Iranians make involve giving up something and gaining something. What they give up is the political capital that they have in the Muslim world in terms of their being the rejection front. And also, if we think even in some of the exercise of Iranian power in the region, it is essentially poised against U.S., Israel and the moderate governments.

Now, the benefit, obviously, is security, opening to the world, et cetera. But the question is that so far, the Iranians have not had a roadmap to that. In fact, the very last proposal that Solana gave to the Iranians, the response that they got is that everything the United States wants from Iran is immediate; everything that it offers Iran is potential and conditional and is not concrete.

And there has not been, if you would, any kind of an engagement with Iran that shows a roadmap as to how this relationship's going to get normalized. The Bush administration, for much of its past years, has wanted Iran to suspend enrichment, but then that's the end of it. There is no talk about normalization of relations. In fact, the Iranians have said more about it recently than the Americans have when the supreme leader, in fact, said that it's not a given that Iran and the United States would not have relations ever. It's just that I will decide when that's the case and they cannot have an embassy right now, because all they want to do is to send, quote-unquote, "spies to overthrow the regime", which gives you a sense of how they're thinking in terms of what is the cost and benefit of each step.

MR. TAKYEH: Let me just say one thing: I think in terms of recognition, they're talking about recognition of Iranian power -- recognition of Iranian prerogatives, recognition to some degree of Iranian preeminence.

I don't believe that the current Iranian leadership, led by Ali Khamenei, is looking for normalization of relations between the two countries. That doesn't preclude tactical dealings on the issues of common concern -- our concern and their concern -- which could be very broad. But I think that if you look at the history of the supreme leader -- I'm not talking about Ahmadinejad. If you look at the history of the supreme leader, he views relationship with the United States as undermining the essential pillars of the Islamic Republic, and that's I don't believe there will be normalization of relations so long as that mentality, which is deeply entrenched in the governing elite, persists.

It is often said that conservatives can do things that the reformers and liberals don't do. That's not the case in terms of Iran. The current conservative counter in Iran is the least actor susceptible to a fundamental transformation of U.S.-Iran relations. That doesn't necessarily mean that you can't have sporadic tactical dealings on issues of importance to both parties.

HAASS: Sounds like the Iranian Nixon is not ready to go to China.

The gentleman in the green shirt on the back row.

QUESTIONER: Of course, a smiling journalist.

On the question of isolating Iran and the possibility, I believe, to isolate Iran -- the isolation of Iran -- I just want to say something and it leads to a question.

HAASS: (Inaudible.)

QUESTIONER: Okay. Isolating Iran somehow means, if the U.S. chooses to isolate Iran it can. What that actually has done in Iran is to create the idea that isolationists in Iran aren't' about "let's go back into our borders", they're about creating another alternative to joining the WTO, for example, which was one of the supported goals of the Rafsanjani period was to join the world markets.

Now, the isolationists in Iran are about how do we actually create a market on our own with China, with Russia, with Venezuela and they're doing so. So that's why isolation is a means and I think that's sort of what America has to get used to -- that isolating Iran means, in a way, isolating America. And for Iran to sort of play this role of building a pole for itself or bringing multiple -- a polar world.

In that context, I guess the question really is, is it possible? Is the world -- with the decline in American power, political and economic, is it possible for Iran -- because that's the way Iranian leaders are thinking. Is it possible to actually create a world where they can -- they don't want you in the -- (inaudible) -- anymore. They want to create their little market.

The question for us is, is that possible? And what role does sanctions play in that? The sanctions are emboldening the isolationists in Iran who are actually advocating that line and I think we're helping them in doing that through a sanction.

HAASS: This is coming back to your point. It's almost an anti-integrationist with our definition of integration.

MR. TAKYEH: Yeah, I mean, WTO has never been that big for them -- for particularly, the current cast of leadership. And you're quite right, they're trying to create their own -- what is often called, and one of the first individuals that articulate that, who's very popular in Aman Babel's (ph) circle, was Khaliboss (sp), who would talk about an Eastern orientation. And they're talking about Eastern orientation in terms of having relationship with Russia, India, China and so on and so forth -- Venezuela's one.

And that obviates the necessity of dealing with certainly the Americans, but quite possibly the Europeans.

NASR: I would put the caveat that the relationship with the East can solve many of the economic problems for Iran, but not some key ones. The Chinese and the Russians do not have the technology to rebuild Iran's energy sector and solve the larger problems that Iran has ultimately would require an opening to the West.

HAASS: Mr. Gelb, you get the last quick question, if you still want it. You don't have to have it.

QUESTIONER: Because everything we've heard all day ahs basically had a component in it of let's say as a minimum 50 percent chance that there's going to be some kind of military action. And underlying all of the conversations that, for a lot of people, raises big questions.

Having heard for the last two years and watching the council take quite a bit of time talking about the subject of soft power and the issue of the publics, rather than diplomacy only at the Ali Khamenei level and Condoleezza Rice level.

Is there any possibility that soft power is useful, productive or possible in a country where, as you put it, there is no interest in anything that would even remotely change the attitude toward the existing Islamic form of government?

MR. TAKYEH: Yeah. I mean, I always thought that one of the ways you can spend the democracy money, which has to be spent -- by congressional mandate it has to be spent in the year it was appropriated, I think -- is to have scholarships and so forth to bring people together outside nuclear science classes. I mean, that's normally bringing cultural exchanges, scholarships and so forth, as opposed to giving it to radio broadcasts. I know what radio broadcasts meaning the Europe-global communications systems -- satellites and so on and so forth.

That's one of the ways of bringing the two countries together. Is it going to solve your immediate problems on the nuclear issue, with terrorism and so forth? No. But it perhaps could help Iranians have a better understanding with the United States and Americans have a better understanding of Iran.

It's very difficult -- at this point, it's very difficult for Americans to go to Iran, because this is a country that has criminalized research. It equates research with espionage. So it's very difficult to do that at this point, but perhaps we can have greater number of citizens of Iran and in various American universities. That may have a good effect, it may have bad effect. Sayeeb Gott (sp) was here and he went back and became an inflamed Islamist. So I mean, you've got to watch who you're sending then.

NASR: I would just add one thing that, you know, the soft power -- in another sense, not just about Iran -- it's also about the region in which Iran is playing it's hand. First of all, there is the issue of Iranian soft power in an area that is of America's interest. And it's -- you could also think of, forget about Iran itself. We have to think much more smartly about what do we do about our soft power in the Arab world and the Middle East, in Pakistan and Afghanistan, which is the arena in which the Iranians are also playing and trying to exert influence.

And you know, the decline of American influence, the rise of anti-Americanism in the Middle East has not benefitted our policies -- not just toward the Arab world, but also towards Iran. And that's exactly why the Iranians can leverage this kind of bad behavior and translate it into political capital.

HAASS: With that, let me just do a couple of things. Let me thank these two gentlemen. As you can see now, I was not exaggerating when I said all those positive things about them.

Let me thank you all for your interest and your perseverance. Perseverance and interest, however, will be rewarded. There is a buffet lunch that is available precisely now. And I expect there'll be some hard food and soft food there for all of you. So thank you all very much. (Applause.).STX

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

RICHARD N. HAASS: Okay, why don't we get started. This is the third movement of the Iran concerto. I'm not sure it'll be allegro -- (laughter) -- but we will, we will see. With us are two of the leading thinkers -- just about anywhere, on the subject of Iran and U.S. policy toward Iran. We are fortunate to have them associated with the Council. We are fortunate to have them with us today -- Vali Nasr, Ray Takeyh. They need no introduction and, as a result, they will get none. (Laughter.)

The first session was on Iran's internal; and the second session, as you know, was on their nuclear programs, and all that. And when we get to the Q&A, I wouldn't be surprised if we returned to some of it -- obviously, there were questions on the Israeli angle, and all that.

But, what I really want to focus on in this last session is U.S. policy toward Iran, because early on in the new administration I would think that one of the first interagency processes of the 44th president will be to test this -- will look at the full range of our U.S. interest concerns, what have you, vis-a-vis Iran; and they will, basically say, do we want to change what we've been doing? If so, to what degree?

But if this were such a drill, or if this were a Council task, the first thing we'd want to do is at least make sure we understood what exactly was U.S. policy towards Iran. So, what I'd like to do is make that the first question, because it's -- I was part of the process for several years of trying to shape it, and so I know a little bit about it.

I wouldn't exaggerate what I know. But, let's just sort of posit what U.S. policy is before we then assess it; before we discuss ways we might change it.

So, Ray, How would you describe, now, U.S. policy?

RAY TAKEYH: Well, I would describe it as two policies. For some reason I don't think there was one. There's actually two. (Laughter)

First of all, there is what happens outside the region, and this has to be through a series of Security Council resolutions that, in and of themselves, don't have substantial coercive power. But they're supposed to convey to the Iranians a measure of international consensus and solidarity against a nuclear infractions, which establishes the basis for informal sanctions that have been inactive, outside the U.N., in cooperation between United --

HAASS: Can I just interrupt? I'm going to be really rude for a second. Before we start talking about the instruments of the policy, what do you think are the goals of U.S. policy towards Iran?

TAKEYH: I think, at this particular point, is to restrain Iranian power, constrain the nuclear program. But those are rather an amorphous aspect of this policy, so there's not that clear pronunciation of it.

And the instruments are, as I've said, they take place outside and within the region, trying to mobilize a regional consensus against expressions of Iranian power.

HAASS: That sounds then -- if the purpose of it is to put a ceiling on the nuclear enterprise, and to constrain or limit the spread of Iranian influence as a result of Iraq, that sounds a little bit like containment.

TAKEYH: Yeah. On the nuclear issue, I would suspect they would want Iraq to have no measurable enrichment capabilities, yeah. So, that's not restrained, that's --

HAASS: That's actually more than that.

TAKEYH: Yeah.

HAASS: That's actually a bit of roll-back in the nuclear area; and containment, if you will, in terms of -- would you buy that?

VALI NASR: I think actually it's rolled back everywhere. It's maybe only very recently that the administration has tried to calibrate its capability, vis-a-vis its goals, and it may have backed off to just try to constrain Iran. But the U.S. wants Iran out of Lebanon; wants it -- not only not come into the Arab-Israeli process, but eliminate all of its influence there.

The U.S. goal for much of the Iraq war was that the Iranians should leave. In fact, that probably was the tenor of the discussions between the U.S. and Iranian ambassadors. And, similarly, in Afghanistan, they quickly, after 2002 -- particularly after the Iraq war, the U.S. also wanted Iran out of Afghanistan as well. I would say -- (inaudible) -- sort of, a frame, is that for much of the past five years the U.S. has wished to go back to 2002. In other words, roll things back to before the Iraq war, as if the Iraq war didn't happen. Put Iran back in its cage; lock the door; and then hope that the regime would fall down. And then also take away their nuclear capability as well.

HAASS: Okay, so if one were going to posit that as the policy -- at the risk of asking a question to which I sense I know the answer, how well is it working? (Laughter.)

NASR: Well, I think -- if I may go first, I think that the main problem is that it was a completely unrealistic policy to begin with. It's a policy of maximal goals with minimal means. And the more -- very quickly, we overreached to a point that even the credibility of getting some modest results began to falter.

And we became very focused, if you would, on whether we were progressing on the nuclear issue -- whether the Europeans and the Russians were helping, et cetera, but in reality, we never managed to change Iran's position in Lebanon. In fact, after 2006, they became much more important

The Annapolis conference failed to eliminate Iran's role in the Arab-Israeli process. In fact, Iran now holds a lot of the cards, at least in the Arab domain. We never were able to force Iran out of Iraq. We've made some gains because of the new stability post-surge, but Iran is not gone. And, similarly, in Afghanistan Iran's presence is there.

And, in fact, the idea of even trying to build a united Arab front that is willing not to deal with Iran -- a Dubai that is willing to cut banking with Iran, a Saudi Arabia that's willing to cut ties with Iran -- none of that has worked. So I think, in some ways, I think the -- the first thing the interagency process has to do is exactly to, sort of, back away and calibrate 'what are our goals, with what are our means?'

HAASS: I assume you're not going to say the policy has been strikingly successful?

TAKEYH: The problem is there's -- as he was saying, there's no regional consensus on Iran. There has never been an Arab consensus on Iran. There was no Arab consensus on Iran during the war -- I mean, you know, Qatar was dealing with them, and so forth. So, attempting to craft a sort of a regional consensus, similar to the one that was done with the Soviet Union during the Cold War, is just impractical.

That has to do something with the way the U.S. allies in the Gulf behave, and so forth. And then we had tried to balance, and hedge, and so on and so forth, as opposed to take unequivocal sides.

HAASS: So, yeah, just to interrupt, to just -- a little bit of a detour; I didn't want to go here yet, but let me just do it. So, when people talk about the idea of Iran, in a kind of anti-Iranian -- to some extent, anti-Shiite, but more anti-Iranian power projection glue to U.S. policy in the region, animating everything from what we used to call "the peace process," to everything else, you'd basically think that's a nonstarter?

TAKEYH: I think it's possible to limit Iran's influence in the Arab East, in the Palestinian-Israeli-Lebanese context. If you have a successful peace process and some sort of mediation diplomacy, it is possible to eliminate the ingredients that lead to Iran to project its influence there. It's possible for Iran not to be a Mediterranean power, but I don't know if it's possible to make sure that Iran is not a Gulf power.

NASR: If I may add to that, I think the Iranians have calculated correctly that the peace process will not go forward sufficiently to really change the dynamic in the Arab world. And, in fact, the U.S. made a big mistake trying to hang its Iran policy on success of the Annapolis conference, and success of the Arab-Israeli issue.

Secondly, I think the Iranians have found out that this anti-Israeli, anti-Holocaust rhetoric plays really well on the Arab street, and it's the best way of blunting the anti-Iranian sentiment on the ground level.

And, thirdly, I think the Arab governments, particularly after 2006 and the NIE report, don't trust -- it's not that they don't trust our policy, they don't trust our competence. They don't think -- they don't want to bet their future, and the future of their relationship with Iran, on an administration who they don't trust can formulate an -- (inaudible) -- policy.

So, they're hedging their bets. It's not that they don't want to contain Iran, it's not that they're favorable to Iran, it's just that they don't trust that we're able to get what we want.

HAASS: Given what we heard in the first session this morning, to what extent should regime change play a part in U.S. policy? Or, ought this to, essentially, be jettisoned either because it's not going to succeed, or it gets in the way of what limited cooperation there could be in other realms?

TAKEYH: I'm not quite sure if there is -- if the problems that United States is experiencing with Iran are subject, or susceptible, to easy diplomatic solutions. Therefore, I think to make the U.S. policy one of -- sort of, ostentaciously a change of the regime, it defeats the purpose of any diplomacy.

However, I would actually differentiate between changing regime, democratization and human rights. I think any sort of a negotiation with Iran should have a human rights component to it, as was the case with the Soviet Union with the Helsinki process.

In that particular sense, what you say to Iran is 'You want to be part of the international community, there are certain norms of behavior that you have to concede to. One is civil society, activities, and so on and so forth; monitoring behavior of your human rights abuses.' I would think that's an important part of an equation to have -- and then sort of a negotiated settlement. For no other reason than it would drive them crazy, because they would object to that because of interference with their domestic affairs, and so on.

But, I don't believe that the United States can have negotiations with Iran without taking into consideration the character of the regime. That's different than the change of regime.

HAASS: But if the United States did that, two questions: Imagine we did that publicly. One, how would that play inside Iran? Second of all, would that cause problems in the region, because we would be holding Iran to some standards we, perhaps, couldn't hold some of our Arab friends to?

TAKEYH: Well, I mean, those human rights discussions take place with other countries as well. It's part of the negotiations we have with Egypt, the Saudis, and so on; and the Europeans who have just negotiated with Iran -- far more successfully than we have, have made human rights a part of the dialogue with the Iranians. And they have actually made some head-ways with that -- inspection of Iranian prisons, demanding the end of certain torture practices, and so forth.

The Europeans, who get sort of a blame for being mercantile and amoral, have actually been far more effective in pressing the human rights with the Iranians than the United States ever has. And in any negotiations that the United States has contemplated, human rights weren't part of it.

A lot of the conversation assumes that the United States and Iran approach things adversarially; there's a -- please turn off your cell phones -- antithetically, that there's no overlap. Let's challenge that for a second, because I was involved in some of the exchanges between the United States and Iran in Afghanistan. And actually there was some limited common cause.

And when I look at the situation in Iraq, for all of the differences between us, I also see that neither of us should oppose a -- more positive, neither of us want to see a country that hemorrhages; neither of us wants to see a country that fails. The United States favored elections. Those elections happened to bring Shiite politicians to power. I would assume, sitting in downtown Tehran, that was not an outcome that they had real problems with.

So, when one looks around the region, are there areas where the United States and Iran can and should cooperate?

NASR: I think, you know, what you say is very important in the sense that even if these areas of common interest are short-run, they provide the trust-building first steps that you would need in order to get to somewhere better with the Iranians. I think Iraq still is a place where Iran and the United States, by and large, are -- by and large, I would say, are on the same page, because they're both supporting the same government.

The Iranians are also hedging their bets, within the Shiite community, by supporting the Sadrists, et cetera. But the Iranians --

HAASS: Have they reduced that support recently?

NASR: Well, they don't have an option, because the Sadrists have been clearly downsized significantly. And that provides an opening. In other words, the only game in town for the Iranians, realistically, is the Iraqi government. It's the government that we're also banking on. Both the Iranians and the United States would want the Maliki government, or some version of it under a different leader, to succeed.

Our interests are the same as Iran in Northern Iraq, about which we don't talk. In other words, the stability of the Talabani-Barzani regime, and their -- and at least some kind of a agreement about the shape of Northern Iraq that would be conducive to Iranian interests.

Around the corner, when the next administration comes out, the big issue would be the Taliban. And Iran was the one country in this region that supported the Northern Alliance, along with India, as you know, against the fight with the Taliban. Again, a strategy of dealing with Afghanistan's stability -- working with the Karzai government, dealing with the drug issue, invariably, Iran and the United States are going to find their points of common interest.

And the third issue is the whole issue of the Caucasus, energy, gas pipelines and Russia. In other words, the way the United States is beginning to think about that region -- namely, how to create energy independence for Europe from Russia, cannot work without Iranian cooperation and participation. And, so you know we may not have enough to think of a fruitful, long-run relationship, but we have enough to at least begin to think of a different kind of engagement.

TAKEYH: The issue of Afghanistan is a peculiarity, because Iranian-American interests in Afghanistan have always coincided, since 1979. And they have never led to a larger cooperation between the two states. They cooperated -- they had the same objective in expelling the Soviet Union in the 1980s, preventing the consolidation of power by Taliban in the 1990s, and the displacement of Taliban in 2001-2003 period. That has never led to a larger cooperation between the two countries. That's one of the diplomatic peculiarities of Afghanistan-Iran-U.S. nexus.

On issue of Iraq, there's a larger agreement between the two powers preventing Iraq from being territorially dismembered; having a diplomatic process -- democratic process that leads to a rise of the (Shiites ?). But between that, and below that, there's all disagreements. Iranians want American forces out of Iraq -- not as precipitously, but out of Iraq. Iranian goal of emerging as preeminent power in the Gulf cannot be sustained so long as there's a sizeable contingent of American forces in the Gulf, whatever their preoccupation.

The relationship with the Sadrist movement is changing. They have a relationship now directly with the militias, or the breakaway militias, special groups, whatever they're called. So there is some degree of disagreement and friction at the ground level, which tends to undermine the larger conceptual agreement between the two powers and the direction -- overall direction that Iraq should go.

HAASS: Has there been, though -- or has there not been some backsliding, if that's the word, between -- involving Iran and the Taliban? My own sense is, whereas in the past the Iranians were quite -- if not unalterable opposed, overwhelmingly opposed to the Taliban, one gets the sense that, somewhat cynically, they've decided the Taliban are a useful instrument?

TAKEYH: Yeah. Sufficiently empowered, but not dramatically so, they can be used as an instrument of inflicting pressure on the United States.

NASR: But I also think that the Iranians are also hedging their bets with the Taliban. I mean, it's the saying that, you know, Ahmed Rashid used to -- liked to say that every shopkeeper in Kabul believes the Taliban are winning. I think the Iranians don't want to end up in the same situation with the Taliban as they were in 1997-98.

It's -- the best time now is to buy their friendship, so you don't have to see the short end of the stick when they arrive in Kabul. Which I think, again, goes back to not just our friends, but also even Iran. There is a belief in that region the U.S. is incapable, essentially, of seeing its policies to fruition. And that allows people, or pushes people to hedge against us, which is not very useful.

HAASS: Which tends to be self-fulfilling.

What is current Iranian thinking vis-a-vis terrorism as an instrument? And has there been any evolution or change?

TAKEYH: Iranian terrorism, it's customary to suggest Iran is the most ardent supporter of terrorism. But, if you look at their terrorism portfolio over the years, it actually has shrank. Part of the Iranian terrorism portfolio was assassination of dissidents abroad. That has stopped. Now, maybe that's because there's not that many dissidents left abroad -- (laughter) -- but still, that has stopped.

So their principal expressions of terrorism, as we call it, would be a support Hezbollah, would be support of Hamas, and whatever they're doing within Iraq. Within that, I think their relationship with Hezbollah is so organic, and is so fundamental to the character, and identity and foreign policy of the country that I don't see that changing. Hamas may be a little different.

HAASS: Why is that -- for a second?

TAKEYH: Hezbollah -- Iranian -- the relationship between the Iranian Shi'a community -- clerical community, and Lebanese Shi'a community, actually predates the revolution. Their relationship that has been mended through seminaries, consolidated through marriage, and Hezbollah has emerged as a successful protege of Iran, particularly in the aftermath of the 2006 war. So, in that particular sense, Hezbollah gives Iran a reach into the Arab piece.

HAASS: Why, when we talk about the Israeli-Palestinian process, or Lebanon, and so forth, why are we talking about Iran? It has no borders. It has no ability to project power in that region. It's because it has these proxies, particularly in terms of Hezbollah, that it can gain it.

Second of all, Hezbollah --

HAASS: Just so I understand, though. When the Iranians deal with proxies such as Hezbollah, is that then because they are seen as useful instruments of projecting and expanding Iranian power? Or is it seen more, because of the Shiite dimension -- it almost reminds me of the debate we used to have about Soviet power versus the spread of communism.

TAKEYH: The reason why that relationship is so important is because it's a marriage of strategy and values. It serves both ideology and tactics. But also, Hezbollah allows Iran to leapfrog over the sectarian divide.

I mean, Vali talks about the, sort of, the rise of Shi'ism, and the Sunni-Shi'a divide. I mean, what is a Sunni-Shi'a divide when Hezbollah flags are flying in Cairo? So it gives you an appeal, to a larger Arab public -- "the street" that he's talking about.

NASR: If I may recite an anecdote. In the morning Ali Ansari was talking about the growth of hand-kissing in Iran. Hand-kissing began with Hassan Nasrallah kissing Khamenei's hand. He's the only Shi'a leader around the world who actually kisses Khamenei's hand. So, that has value too, you know. (Laughter)

HAASS: Hard to quantify. (Laughter.)

There's lots of people that think -- or some people think that, whereas Israeli-Palestinian talks are, shall we say, problematic in the extreme -- for a whole raft of reasons, including the weakness and divisions on the Palestinian side, but Israeli-Syrian talks have slightly better prospects. Would Iran try to stop that when -- and could they? Imagine you did have a situation where the next Israeli government was prepared to try to strike a peace deal with Syria, and Assad was as well. How would Iran approach that?

NASR: Well, I mean, so far the Iranians have not been favorable to the talks, and have publicly criticized Syria. And I think the main sign of the breach is the assassination of the Hezbollah terrorist Imad Mughniyeh, which both Hezbollah and Iran believe was the olive branch that the Syrian intelligence gave to Israel as a sign of goodwill. There's a lot of bitterness about that.

But the Iranians probably figure that it's going to be awhile before there is a peace treaty. And for Iran, I think everything right now is about the next quarter, not the next quarter century. And, you know, the Israelis probably -- they have elections, they're not likely to give enough to Syria to seal the deal.

Iran also has enormous amount of direct foreign investment in Syria. Some say upwards of $8 billion have been invested in Syria. You have a lot of common ground in Lebanon. Syria cannot manage Hezbollah without Iranian help. Israel cannot turn Syria on a dime. At best, you know, the idea of a peace treaty between Israel and Syria is a backing away from war, and probably a, sort of, a cold peace between them.

But even that, I think the Iranians think is not in the immediate future. So, they don't see the real strategic map of this region changing dramatically -- say, in the next six to eight months, which is really critical for them in terms of whether or not they're going to be somewhere else with the United States.

HAASS: Only in the Middle East is facilitating an assassination seen as a sign of goodwill. (Laughter.) But, I will let you all ponder that for some time.

Okay, so you have a new administration in Washington in place. It's the spring of 2009. People at the senior level have been confirmed. Some of the initial reviews have been launched. And when one looks at the question of U.S. policy toward Iran, for a second, what is the relationship between our previous session -- the emphasis on nuclear, and everything else, to what extent does that -- should that dominate?

And even beyond that, to what extent should the United States try to impose linkage in its relationship with Iran? Or should it basically say, every boat on its own bottom. If we can make progress in the nuclear, great, and if we can't make progress, at the same time, on terrorism, so be it. How should the United States approach its relationship with Iran?

TAKEYH: I mean, Ash touched on this in the previous session. I think when you were talking about limited negotiations over arms controls issues, or larger negotiations where arms control would be a component of a larger context between the two countries, I suspect, that's the best way of approaching it, because I think there is a conceptual divide between Iran and the United States on the nuclear issue.

And Iran and the international community on the nuclear issue. Iranians look at negotiations as a means of offering confidence-building measures so they can proceed with a nuclear program. The United States looks at negotiations as a means of stopping their nuclear program. So, that conceptual divide, I don't know how it's going to be bridged.

But perhaps in the larger context of negotiations between the two countries that deal with stability of Iraq -- Gulf security, diplomatic and economic sanctions, frozen assets, Hezbollah, and so forth, maybe you can make some progress. Now, if all these issues are linked, then that's the formula for paralysis.

HAASS: But just so -- but just so I understand, does that mean the United States has two baskets of sanctions? One is a basket of sanctions we'd either raise or lower, depending upon the nuclear issue; and the other is a basket of sanctions we keep in reserve for everything else?

TAKEYH: No, I'm not suggesting that. What you're trying to do -- essentially, some of those sanctions will have to be modified over time anyways.

One of the easiest things the United States to do is to deal with the frozen assets issue, which would be, symbolically, even very powerful; the diplomatic recognition issues, or moving towards establishment of diplomatic recognition. But that's the complexity of these negotiations, is how much of your grievances with Iran are you willing to live we?

At the end of negotiations, you should be prepared to enter a period of ambiguity, where none of these issues are resolved conclusively to anybody's satisfaction. How much of a Iranian nuclear program can you live with? How much of Iranian influence are you willing to concede in Lebanon? How much of an Iranian presence is acceptable in Iraq?

And if the answer to all those questions is "none of the above," then I wouldn't actually suggest negotiations, because then you're trying to get to negotiations what you couldn't get through containment and coercion.

NASR: I would not disagree with Ray, but I would think that with a new administration there is a framework problem, in a number of ways. One is that we have an Iran problem, and we see it essentially just as a nuclear problem. Every discussion begins and ends about, 'what are we going to do with that.'

But I think it's a much bigger problem. And I think it's -- I went back to your introduction this morning, that it's not possible for us to get the greater Middle East right unless we properly understand the role of Iran in the region. Then, you know, we have to sort of approach this thing completely differently.

And I think the Iranians look at it this way; in other words, the nuclear issue, for them, is a lever to changing their whole status in the region. I think one of their strategists said that either this issue will solve absolutely everything between the United States and Iran, or there's no point even talking about it.

And I think, you know, it might be the case that it's too late. That, for so long, the United States has made this only about suspending enrichment and ending the program; that we, sort of, have gone so far down this road it's very difficult to come back from. But unless we find a way to broaden the Iran issue, in the context of our understanding what's happening in that region, I think we're not going to get it right.

HAASS: But, let me just sort of, play that out for you, just so I understand. If you thought of the U.S.-Iranian negotiation as one of, for want of a better word, "multiple baskets" -- you have a basket called "nuclear," you have a basket called "human rights inside Iran," you had a basket called "Iraq," one called "Afghanistan," one called "Lebanon," one called "Hamas," whatever, "Hezbollah," "terrorism." If you had 10 baskets from, you know -- and maybe "assets," and some of the baggage, if you will, left over from the last three decades.

Imagine you started talks on the nuclear, and couldn't make any progress there. Do we deny ourselves leverage? Is that the right way to think about it, if we still go ahead on the other baskets as best we can? How is it we ought to structure these talks, because it seems to me we have to think about leverage; we've got to think about priorities; we've got to think about what might influence Iranian behavior, more so before we do something about flying out assets.

What do we link? The flowing out of assets? Or do we simply say, here, have it. We're going to flow out some assets in the hopes that, therefore, you reciprocate? How do we structure? How do we think about this?

NASR: Well, you know the way it's been figured is that the nuclear issue is on the forefront. First of all, it's been there; secondly, because there is a very tight timeline attached to it. You want the Iranians -- if we can intervene in the program before they get too far ahead, as both Ash and Gary mentioned.

But I think, you know, the idea of talking with the Iranians about everything at the same time may not be the best approach, right. I mean, they might have to sequence it. There are things that we are closer with, and it's possible to get at least a certain modicum of agreement on faster, and build trust that then would be parlayed into the --

HAASS: For example, what do you see as some the lower hanging fruit?

NASR: I would say still Iraq, Afghanistan and the Caucasus as probably lowest hanging fruits. I mean, it's possible for us to have a different kind of a discussion on Iraq. I don't think we've been talking to Iran in Iraq at all. The two ambassadors meet to give each other demarches. You know, a list --

HAASS: They're not even meeting.

NASR: -- they don't meet anymore at all. But there isn't -- there is no fruitful engagement of looking at what are each other's interests, and how they can have a constructive view of supporting the same goal in Iraq.

We could have a similar kind of a framework about Afghanistan. We actually had it. Not only at the Bonn conference, but actually for the one year or so after Ambassador Khalilzad was in Baghdad he would meet with his Iranian counterpart and it wasn't worth beans. And they got a lot of things done before they went to Loya Jirga.

One of the dilemmas we have is that, actually, the most difficult issues, that we are farthest apart, are the ones that are on the forefront of the Publican (ph) and the policymakers in the United States. And they completely overshadow where we could actually be gaining things.

And I think, you know, we also have to have a long-run game plan. I mean, is the aim only to mitigate Iran's worst behaviors in multiple arenas, and then leave it alone? Or, do we have -- as it was the case with China, a grander strategy of bringing Iran in from the cold? But if our aim is really to -- is not just fixing one, two, three, four things, but really changing the profile of that country, then I think we need to think about the sequence of things that get us there a bit faster.

HAASS: Do you think what you were describing -- to use my language -- I'd say integrating Iran?

NASR: Exactly.

HAASS: Is that -- what's your sense of it? Is that a pipe dream? Do you think that's a real option? Are you thinking in terms of years, decades, generations? And if you are thinking about it, is there a sequence that you would say here's how to do it or how not to do it? I mean, is this a -- I mean, because it was the U.S. policy, in some ways, towards China. There's been elements of it towards the old Soviet Union, to some extent with Russia. Is this a realistic option, given the nature of the Iranian regime and its own foreign policy goals?

NASR: I think it's a difficult process and it's not going to be quick, but I think at least beginning the process and setting the mechanisms in place is not that unrealistic. And I think, in fact, if anything the sanctions are probably the single biggest negative here, because closing Iran to the world economy, reducing the leverage that Europeans, Americans have within Iran, reducing relationships between Western and even regional business communities with the areas in Iranian government, civil society, business community that would be supportive of that change is not actually beneficial.

So I think a policy of isolating Iran is not going to help integration. In fact, one of the most important outcomes of the sanctions has been a much more aggressive turning towards China within varieties of economic sectors in Iran. And that only will in the long run make this much more difficult.

Iran is deeply integrated into the Middle East structure. It has security projections all over the place. Its trade with Europe has gone up -- 17 percent with Italy, 30 percent in France, Germany. The only country whose trade has declined with Iran in European countries is actually Britain.

The level of trade with China and Russia is deeply increasing. I don't know what -- the United States -- does the United States have a key to Iranian integration in the era of global economies? So Iran is not a country that's isolated like North Korea is. I mean, you can't a bank loan from UBS, but they seem to be doing okay nevertheless.

So it's important to recognize that we might not have the keys to preventing a country whose principal export is a commodity that international economy desires and relies on can be integrated or disaggregated from the international community at our will. That is not potentially a leverage that we possess.

The leverage that we possess is having an understanding of the Iranian government that has, in my view, re-conceptualized its national interests. It doesn't even use national interests as necessary economic gain, but security advantage. It's a security driven -- its principal goal is to increase its power and influence in the Middle East. And that is potentially a leverage that you possess in terms of integration of Iran into a security structure of the Middle East.

HAASS: Well, let me just press you on that. What is the --

TAKEYH: Please don't! (Laughter.) I don't understand you, really.

HAASS: Since you don't understand what I mean, I don't understand what you mean. And one of the interesting things you've got to do in diplomacy is figure out not just how much things matter to you, but the value you believe they have for the other side. And usually in negotiations, the marketplaces are not equal.

TAKEYH: Yeah.

HAASS: There's a dis-equilibrium between, if you will, between the two marketplaces.

So what is it that Iran would value most? Is it, for example, some sort of an American security insurance -- conditionalized it might be. What is it the Iranians are looking for -- or is it the assets, is it diplomatic?

If they were having this conversation, how would they structure their list and what is it that they care most about from us?

TAKEYH: I don't believe they're looking for security assurances. As a matter of fact, they openly scoff at the idea of security assurances. No country predicates its security on assurance of its adversary. France and Britain achieved independent nuclear capability irrespective of security assurance from an allied country. Nobody bought the idea that we'll put New York at risk to save Berlin.

So if an ally country doesn't believe in that, how do two countries with deep-seated --

HAASS: Actually, the Soviets did, but that's okay.

MR. TAKYEH: So how did that affect countries which are adversarial to one another? So let's put that aside.

Security assurances is different from a security dialogue between the two countries. I would say, at this point, there's a debate within Iranian security establishment, as I understand it. And the debate on one side are those who believe that Iranian preeminence in the region can only come about as a result of confrontation with the United States. It's a prize to be achieved through confrontation and defiance and what they call confrontational diplomacy.

And then there are those who essentially actually subscribe to Shah's ideology, that the only way Iran can become a leading power in the Gulf is through a different relationship with the United States. That American power might be declining, but they can still be a potential barrier to Iranian resurgence. That is the debate.

Now, the way you impact this particular debate is for the United States to become more active diplomatically. It may not work, but I think that's where it -- that's where I would situate the debate.

NASR: I agree. And I think you can also partially, for sure, what price -- what is the value of what Iran has gained since 2003 to the regime and this issue of security. I think, you know, ultimately the only assurance we can give in security is an American embassy in Tehran.

HAASS: So they can take it over! (Laughter.)

NASR: No, I mean -- but in reality, in other words, the security assurance will not come in terms of any kind of a guarantee. It means when you have a relationship with another country, you would feel more secure than when you don't.

So I think, you know, that's why exactly that's where Iran ultimately could give up the nuclear power. It's not a matter of just a few carrots and a few sticks. It wants a completely different kind of relationship with the United States.

Secondly, I do think there is a lot of value to what Iran has gained in this region for it -- whether or not it intended to make these gains; whether or not it's the U.S.'s fault -- but Iran is staking a lot of its political capital in the region and domestically on maintaining its position in Iraq, in Afghanistan. The entire risk they're running by a very aggressive anti-Israeli policy in order to pacify the Arab world or to have Ahmadinejad the number one in a poll by Al-Ahram in Cairo.

These all suggest that they look at this very -- as something they want to keep. And you can see it even among the most pragmatics in Iran would say, look, the only country that's ever invaded Iran is Iraq. And the only aggressive attack against Iran in modern times has come from that neighbor. Iran has to be in Iraq in order to protect itself. The defense of Iran begins in a forward position in Basra, in a sense. And therefore, even they are arguing that Iran cannot be excluded from Iraq. It wants to maintain that position.

So I think, you know, if there was absolutely successful negotiations between Iran and the United States and they really solve all the problems, I think where I would differ with the Bush administration -- the Bush administration thought that the result would look like 2002 and Iran would agree to leave Lebanon/Palestinian issues, Iran and Afghanistan.

I think if we're really successful, the result would be a recognition of Iran's position in this region, that they will be invited to the next Palestinian conference; they will have a say in who's going to be the president of Lebanon; they will -- you know, one of the reasons they want us to leave the region is because that's part of this reality -- that they will actually have a say in the future of Iraq, formerly, and also of Afghanistan. That they will look a lot more like the Brazil or the China or the India of this region than merely one of the 20-some countries in the Middle East.

So I think that's something to negotiate with them.

HAASS: What'd be in it for us, then?

NASR: Well, what would be in it for us is the facts -- we've begun this discussion by believing that the fact of Iranian power is something bad. Iranian power in this region is not bad in and of itself. It's only bad if it's working against us. In other words, we didn't have a problem with the shah owning the Persian Gulf when we didn't have a problem with the shah.

Our position's very different from the Arab world. The Arab world really doesn't care about the Iranian regime. It cares about Iran. It's inherently anti-Iran. It would have a problem with a democratic Iran asserting hegemony; it would have a problem with an Islamic republic asserting hegemony.

I think if the United States can arrive -- the end result of this discussion would be that the United States ends up getting many things that it wants; that Iran's presence in this region would not be disruptive; that if it gets a role in Lebanon and Palestinian issues and Iraq and Afghanistan, it wouldn't be standing out there throwing stones; that it will not destabilize governments around it; it would not support subversive regimes; it will not promote and export revolution. And potentially, even, it will sort of solve the security functions around the Persian Gulf so we won't have to have 180,000 troops and two aircraft carriers for an indefinite time period in order to deal with this region.

I mean, the main gain for us is reducing a very expensive and undesirable security footprint in the region. And also being able to bring Iran from where it now to a different base. The price for it is the price of a much more influential Iran. Now, the dilemma we have is that the Arabs won't go along go with this.

HAASS: To say then on your statement -- to deconstruct, though, what you said, which is in some ways accepting -- I don't know if the word is the institutionalization of Iranian power -- something along those lines -- implicit in that, to use Kissinger's writing about Germany in a very different context in the late 19th century, that Iran is conceivably not a revolutionary power; otherwise, why would we want in any accept it or institutionalize it? And that any conversation with Iran cannot be narrowly nuclear only.

But implicit in what you're saying, it seems to me, is an Iran -- the project of Iranian power is not only bad; and second of all -- indeed, to some extent could be good; and secondly, we are looking, if not a grand bargain, at least at a very broad conversation with Iran.

NASR: Exactly. I mean, Iran -- I agree with Ray. Iran can go down different roads. It can go around the road of Japan of 1930 or it can go around the road, which is much more constructive: the road of India. And I know even we had this discussion that, you know, if Iran goes with -- gets the capability, even short of ever using it, it can become a far more aggressive country.

That, I think, is a very distinct possibility. But it's also possible that Iran may behave a lot more like India after it got the bomb. It relaxed; it began to turn its attention to other things. And the key question is that some of these issues are fluid at this point in time. And I think Ray's absolutely right that these debates within Iran are very -- are ongoing. And part of the whole use of aggressive diplomacy by the United States should be to try to somehow interject ourselves in that debate, to have a say in which direction Iran would lead.

HAASS: Let me sort of ask, then, one last question to get operational for a second.

As I listen to you then, one of the outcomes of the inter-agents review about what happened in the spring 2009, I would assume would be that you would want to see is quite possibly a more active American diplomacy with Iran, even an Iran coordinator or envoy, but one who had a very large set of issues in his or her pocket -- not a nuclear-only envoy, but essentially a nuclear-plus envoy that would be free to raise virtually any bilateral or regional or even global issue. So is that about right?

TAKEYH: Currently, that's only the political directors for Europeans and Iranians. So it comes, you know, technically it comes to that office. So if you want to begin with an envoy, you have to disturb that configuration.

What Vali was trying to suggest is can you -- and I don't know the answer to that -- can you concede to an Iranian hegemony and turn it into a force with begin power, which essentially was the U.S. policy during the shah of Iran? Was that right, to some extent?

HAASS: Why would it have to be hegemony? Why couldn't it simply be significant Iranian influence? Hegemony -- the idea that the United State would concede hegemony over this, by the way, seems to me a nonstarter. It may not, however, be possible to exclude Iranian power.

So the real question is on what terms should the United States be prepared to countenance Iranian power?

MR. TAKYEH: There's a differentiation I would make between different parts of the lease, is the policy can probably work in terms of having greater cooperation or security issues in the Gulf and Iraq -- although that comes at the price of intense allied management, but there'd be some Gulf security and Gulf countries that will object to that.

I think in terms of the Arab peace, in terms of the Lebanon and the Palestinian area, our interests are divergent, because the actors that we want to disarm and marginalize -- Hamas and Hezbollah -- are those that Iran sees as necessary for its influence to their power. So I don't know how you bring Iran into a discussion on the Israeli-Palestinian-Lebanese peace process over vociferous objections to begin with of the Israelis. The invitation of Iran to Annapolis would be kind of difficult, given the fact that they came on the heels of a country that held a conference denying the Holocaust.

I mean, that's -- you know, I can see -- in Lebanon -- I can see a discussion between three powers in Lebanon. You know, Iranians had a diplomacy toward Lebanon. They wanted to mediate the civil war in Lebanon in conjunction with the Saudis and two countries objected to that: Syrians and the Americans for different reasons.

(Cross talk.)

NASR: No, let me put it this way: This is why I think the word "hegemony" and the way we look at it, by the way, is very important. The Iranians may want to go in this to protect hegemony, but in a successful negotiation they will come out with something far less. And I think the model is probably India.

I mean, we at some point tacitly accepted that India will be the prima center part of the dominant source in South Asia, and that the United States will stop trying to prop up Pakistan to continue to challenge India's position. And you know, by and large, India's not hegemonizing the region, but it's a recognized fact that, you know, it's the dominant force in the region.

I think, you know, the points that Ray raises are correct, but that's all because we cannot come to these issues without having a framework to begin with. We cannot all of a sudden invite them to Annapolis or begin a discussion with Lebanon when it's not part of an overall framework of where we're going with Iran.

And I think, you know, before getting into -- I mean, the first thing I think in a new administration, if it's serious about such a vision, is not to come up with mechanics. But it has to be sort of a declaration from the stop -- a statement of intent that, you know, that is where American position on the Middle East and American view of Iran is going.

And I think, you know, that's not going to come without having to have serious back channel discussions with Iranians to sound them out; to, you know, to have also elicit, if you would, sense of whether you were going to have a partner in figuring out these negotiations. The negotiations are going to be difficult enough.

HAASS: I would think, for what it's worth, the most you're going to get is a statement that indicated American conditional readiness -- emphasis on the word "conditional" -- to accept certain projections of Iranian power, dependent upon how Iran were to exercise that power, whether we saw it as constructive or destructive.

And I think the biggest intellectual question for the new administration won't be mechanical. It will be conceptual, as it always is, which deal a lot with the question of linkage and to what extent the United States is prepared to disaggregate, if you will, the Iranian challenge; or to what extent, in particular, we would require that the nuclear issue be settled as a -- I don't want to say precondition, but as a necessary element of a larger relationship.

Put another way, whether it's possible to conceive of a better U.S.-Iran relationship absent satisfactory progress in the nuclear realm.

MR. TAKYEH: Well, you have to define what "settled" means.

HAASS: Well, exactly. And that's, you know, one of the questions and obviously, there's a range of views.

Okay, since we resolved everything, we're going to open it up now. And again, this is the last of the sessions, so I think a lot is fair game, whether it's narrowly on what I've been trying to pry these two gentlemen are or not.

Sure, Ken.

QUESTIONER: Thank you.

First of all --

HAASS: Introduce yourself.

QUESTIONER: My name is Kenneth Bialkin.

First of all, I'd like to say this has been a fascinating discussion. I'd like to congratulate you, Richard, for provoking a discussion that has helped many of us focus ourselves on issues that we've been thinking about. Perhaps the discussion has been very helpful in helping us direct our long views and I thank you very much for that.

In listening to the discussion, however -- and you raised the question of interagency review in the next administration to see what the policy toward Iran ought to be -- I'd like to start with the abiding question of do you think the approach to that interagency review would precede from the same basic assumptions, irrespective of which candidate, McCain or Obama, gets elected? Is that review likely to be independent of expressions so far seen at this stage of the campaign by each of the campaigns, or will that review be preordained by policies already in place?

I took it from the debate that both speakers, to a greater or lesser extent, advocate diplomacy, engagement and discussions with Iran on trying to find those areas where you can find a middle ground, while at the same time ignoring their fundamental precept -- namely that it's an Islamic republic; it is run by a theocracy; it is an absolute policy, grounded in certain radical views of the Koran, which is sustained by the forces of terror.

And the present administration --

HAASS: That's -- you've got to --

Q -- takes that view and the present administration would follow the advocacy of the two of you in various forms, with the label of a appeasement.

HAASS: They call it -- (inaudible).

QUESTIONER: I would call it appeasement. (Laughter.) And maybe a different view is proper, but isn't your advocacy of engaging Iran, as though they did not have the fundamental precepts expressed by Ahmadinejad and the supreme leader -- can we afford to ignore those statements and make believe it's business as usual and is that appeasement?

NASR: First of all, I think, you know, even the policy of not talking to our enemies, we already got over that in Iraq. We talk to plenty of people, you know, who are shooting at us and we renamed a lot of the terrorists as sheikhs and they're not on our pay.

Certainly I would say that, you know, the Iranian regime, without a doubt, has an ideological component in it. And in many ways this is not unfamiliar to us. We dealt with the Soviet Union as well in periods in which its leadership -- or with China -- had very, very restricted and ideological views of the world. When the United States engaged China, the Chinese were hardly a moderate leadership then. They had killed millions of their own population in a cultural revolution.

Diplomacy does not mean throwing the towel in with the Iranians. If you looked at the current situation, war doesn't look good. As we saw in the last panel, it may not even get us what we want. It's very clear that in all quarters of the United States, the current situation is unacceptable as well. In other words, that the Iranians would continue to build centrifuges and snub their nose at the United States.

Well, the only alternative really remains is that how can you -- you need to try something that you haven't seriously tried. And I think that diplomacy off the bat has a game-changing quality, because if nothing else, it will throw the Iranian game plan into a tizzy. The Iranians have been operating on the basis of assumption of the past -- on the past six years. That this administration is not serious about talking; it will not talk. There's no point talking to it. And at the same time, it's increasingly toothless. It cannot do anything militarily either.

And if there is a serious engagement with Iran, which doesn't mean giving in, but is a serious engagement, the Iranians would have to calculate things differently. I mean, there are voices in Iran which often say, you know, put something on the table that will create a breach between the Iran people and its regime; put a deal on the table that would actually much more open up the debate that Ray talked about.

None of that we have tried. I mean, we have not really seriously contemplated what uses diplomacy can have for all purposes -- not to please the Iranians, but to get suspension, to get to getting a change of behavior in arenas that matter to us.

HAASS: We've got lots -- Ambassador Murphy.

QUESTIONER: I'm wondering what do you believe has survived of Ayatollah Khomeini's interest in Islamic world leadership? And what the present leader -- what priority the present leaders give to the Shi'ite-Sunni rivalries, and in that connection, what has been their reaction to Rafsanjani turning up with King Abdullah in an interfaith conference and hands across the Shi'ite-Sunni divide? How seriously do they take that sort of activity?

MR. TAKYEH: The Iranian policy since 1979 was never to describe themselves as a Shi'a power. It was always an Islamic power. The Iranian model of governance had relevance beyond the Shi'as. It was the Saudis and others that called them Shi'a in order to (ghettoize ?) them, put them in a corner and prevent their influence. So there's always been a more of a pan-Islamic aspiration and that has sustained itself.

I have a different view of the Iranian leadership, maybe than Vali and others do. Mainly, I think the number of people that are involved in actual decision-making has lessened over the years. That's what Ali Ansari was saying this morning. I would differentiate between a governing elite and a political elite. And the governing elite have lessened and there is a lot of political elites.

And what the governing elite brings to power is a combination of ultra-nationalism or what Ali would call vulgar nationalism and still a tinge Islamism. And the Islamism is what defines and actuates your opposition to Israeli-Palestinian accord or leads you to cast aspersions or deny the legitimacy of the state of Israel. So there's an Islamic component that still conditions Iran's international relations. I don't believe the Islamic Republic's international relations can be entirely similar to that of the Shah, which was not necessarily dealing with the religious complexion of its antagonists and so forth.

So it's always going to be a state that is somewhere between pragmatic definition of national interests and revolutionary values and it's always going to have that dispersive component to it, which makes it an infuriating negotiating partner.

HAASS: I've got about a dozen people. So if you'll be succinct, and I'll ask my two colleagues here to be succinct, we'll get as many of you as we can.

Given the picture you've already given us of U.S. interests and U.S. policy, what do you think U.S. policymakers think they will be accomplishing for both an overt Iran democracy fund set of activities and through what are reported to be the covert operations that supposedly secret presidential findings have begun stepping up? To what extent is there something of a "hail Mary" pass to regime change in is? Or is it simply a way of trying to get leverage? To what extent can it be productive or counterproductive?

MR. TAKYEH: You know, I have to confess, I don't know about the covert stuff. I read what I read, unless you have the ethnic -- Iran is an ancient nation whose boundaries are largely intact. It is not an amalgamation of kind of ethnic groups put together by British mpireans. So it's a different country in that sense.

I don't know at this particular point. I mean, Condoleezza Rice has said many time that our policy is not regime change, it's regime behavior. The problem is they don't believe it. And will they believe the successor as easily? This is a political leadership, as Vali was saying, that lives its conspiracies. So to some extent there is a degree of mistrust that they bring to the table which has to do with their own experiences and their own upbringings and their own kind of calculations that are unlikely to be mitigated by American pronouncements.

HAASS: Liz Chatter (ph).

QUESTIONER: (Off mike.)

HAASS: The microphone up front.

QUESTIONER: I was struck by the comparison that you made in terms of the India model. And I would suggest that there were decisive shifts in India's policy, without which a good relationship between India and the United States would not have been possible. And there were really, you know, serious compromises besides structural changes. You know, the collapse of the Soviet Union, rise of China, created very compelling reasons to see certain kinds of convergence.

So I was just wondering where is it that Iran can shift its policies to come some distance to meet the United States to make such a positive -- (inaudible)?

HAASS: And in particular, could it happen with oil at $120 a barrel or would we need to see oil at $80 or $60 a barrel to see the Iranians maybe rethink their worldview?

NASR: Well, I mean, it's useful to talk about India or China, et cetera, as sort of general ways in which we can imagine the future. They're not identical in anyway.

Just as, you know, India began to shift its position requiring economic changes that came after a period of economic downturn, it also had a major change internally when the DJP came to power with a very different idea about foreign policy. And also, you had the collapse of the Soviet Union. There's no doubt that the neighborhood in the Middle East has drastically change. And that in itself has opened certain possibilities. Oil is, obviously, a very important factor.

But I think, you know, thinking about this issue, you have to think that the Iranian leadership looks at everything in a cost-benefit analysis. The problem, I think, is not so much of, you know, whether or not to make a shift, it's that the cost of the very first handshake with the United States is extremely expensive for Iran. It loses all of its position in the Muslim world as the leader of the rejection front; all of the political capital that it has on the Muslim street. And therefore, it evaluates the policy shifts that it makes in light of what it's going to gain as a consequence of what it's going to give up.

And in the mind of that leadership, I think, it's so vested in this entire political capital that it gets from it being the bad boy of the Muslim world and the Middle East, that it has to think that it's going to get something that is very fruitful.

And in fact, going back to that first question, if the United States wants to think, what is the one of the major benefits that it gets from brining Iran into some kind of an engagement, is that it would have a major impact on that aspect of politics in the Muslim world and the role that Iran plays with it.

HAASS: Bob Nisan (sp).

QUESTIONER: In this interagency discussion and back channels and all the rest, and what Ray said, how do you know to whom to go to start this discussion? Who has the power to deliver? If you talk about the political front doesn't and the religious front does, and to whom do you go and how do you start and which backchannels do you go to?

MR. TAKYEH: Javier Solana negotiates regularly with the secretary of Supreme National Security Council, which at this point is Saeed Jalili. He was recently elevated as not just a presidential appointment to that council, but also a representative of the supreme leader. That's a port of call. And he's sort of way out there in terms of his ideology. So that's the port of call.

HAASS: Allan Gerson.

QUESTIONER: Allan Gerson.

You may have answered the question when you talked about the costs that Iran calculates that would be involved in a handshake with the United States, but at the end of the last session there was an intriguing point made for the floor. It was suggested by an individual that watches Iran closely that what the Iranian leadership really wants is recognition by the United States -- or they it's on the top of its list -- and the opening of diplomatic relationships, not withstanding its commitment to confrontational diplomacy in certain quarters.

So my question is how important is it to the Iranians to have recognition by the United States and diplomatic relations; and if it is important, how does U.S policy leverage that?

HAASS: That's almost the opposite of the argument that its less of a cost for the Iranians than it is, if you will, a benefit to have an open dialogue with the United States. Which is it?

NASR: Well, every policy or every decision the Iranians make involve giving up something and gaining something. What they give up is the political capital that they have in the Muslim world in terms of their being the rejection front. And also, if we think even in some of the exercise of Iranian power in the region, it is essentially poised against U.S., Israel and the moderate governments.

Now, the benefit, obviously, is security, opening to the world, et cetera. But the question is that so far, the Iranians have not had a roadmap to that. In fact, the very last proposal that Solana gave to the Iranians, the response that they got is that everything the United States wants from Iran is immediate; everything that it offers Iran is potential and conditional and is not concrete.

And there has not been, if you would, any kind of an engagement with Iran that shows a roadmap as to how this relationship's going to get normalized. The Bush administration, for much of its past years, has wanted Iran to suspend enrichment, but then that's the end of it. There is no talk about normalization of relations. In fact, the Iranians have said more about it recently than the Americans have when the supreme leader, in fact, said that it's not a given that Iran and the United States would not have relations ever. It's just that I will decide when that's the case and they cannot have an embassy right now, because all they want to do is to send, quote-unquote, "spies to overthrow the regime", which gives you a sense of how they're thinking in terms of what is the cost and benefit of each step.

MR. TAKYEH: Let me just say one thing: I think in terms of recognition, they're talking about recognition of Iranian power -- recognition of Iranian prerogatives, recognition to some degree of Iranian preeminence.

I don't believe that the current Iranian leadership, led by Ali Khamenei, is looking for normalization of relations between the two countries. That doesn't preclude tactical dealings on the issues of common concern -- our concern and their concern -- which could be very broad. But I think that if you look at the history of the supreme leader -- I'm not talking about Ahmadinejad. If you look at the history of the supreme leader, he views relationship with the United States as undermining the essential pillars of the Islamic Republic, and that's I don't believe there will be normalization of relations so long as that mentality, which is deeply entrenched in the governing elite, persists.

It is often said that conservatives can do things that the reformers and liberals don't do. That's not the case in terms of Iran. The current conservative counter in Iran is the least actor susceptible to a fundamental transformation of U.S.-Iran relations. That doesn't necessarily mean that you can't have sporadic tactical dealings on issues of importance to both parties.

HAASS: Sounds like the Iranian Nixon is not ready to go to China.

The gentleman in the green shirt on the back row.

QUESTIONER: Of course, a smiling journalist.

On the question of isolating Iran and the possibility, I believe, to isolate Iran -- the isolation of Iran -- I just want to say something and it leads to a question.

HAASS: (Inaudible.)

QUESTIONER: Okay. Isolating Iran somehow means, if the U.S. chooses to isolate Iran it can. What that actually has done in Iran is to create the idea that isolationists in Iran aren't' about "let's go back into our borders", they're about creating another alternative to joining the WTO, for example, which was one of the supported goals of the Rafsanjani period was to join the world markets.

Now, the isolationists in Iran are about how do we actually create a market on our own with China, with Russia, with Venezuela and they're doing so. So that's why isolation is a means and I think that's sort of what America has to get used to -- that isolating Iran means, in a way, isolating America. And for Iran to sort of play this role of building a pole for itself or bringing multiple -- a polar world.

In that context, I guess the question really is, is it possible? Is the world -- with the decline in American power, political and economic, is it possible for Iran -- because that's the way Iranian leaders are thinking. Is it possible to actually create a world where they can -- they don't want you in the -- (inaudible) -- anymore. They want to create their little market.

The question for us is, is that possible? And what role does sanctions play in that? The sanctions are emboldening the isolationists in Iran who are actually advocating that line and I think we're helping them in doing that through a sanction.

HAASS: This is coming back to your point. It's almost an anti-integrationist with our definition of integration.

MR. TAKYEH: Yeah, I mean, WTO has never been that big for them -- for particularly, the current cast of leadership. And you're quite right, they're trying to create their own -- what is often called, and one of the first individuals that articulate that, who's very popular in Aman Babel's (ph) circle, was Khaliboss (sp), who would talk about an Eastern orientation. And they're talking about Eastern orientation in terms of having relationship with Russia, India, China and so on and so forth -- Venezuela's one.

And that obviates the necessity of dealing with certainly the Americans, but quite possibly the Europeans.

NASR: I would put the caveat that the relationship with the East can solve many of the economic problems for Iran, but not some key ones. The Chinese and the Russians do not have the technology to rebuild Iran's energy sector and solve the larger problems that Iran has ultimately would require an opening to the West.

HAASS: Mr. Gelb, you get the last quick question, if you still want it. You don't have to have it.

QUESTIONER: Because everything we've heard all day ahs basically had a component in it of let's say as a minimum 50 percent chance that there's going to be some kind of military action. And underlying all of the conversations that, for a lot of people, raises big questions.

Having heard for the last two years and watching the council take quite a bit of time talking about the subject of soft power and the issue of the publics, rather than diplomacy only at the Ali Khamenei level and Condoleezza Rice level.

Is there any possibility that soft power is useful, productive or possible in a country where, as you put it, there is no interest in anything that would even remotely change the attitude toward the existing Islamic form of government?

MR. TAKYEH: Yeah. I mean, I always thought that one of the ways you can spend the democracy money, which has to be spent -- by congressional mandate it has to be spent in the year it was appropriated, I think -- is to have scholarships and so forth to bring people together outside nuclear science classes. I mean, that's normally bringing cultural exchanges, scholarships and so forth, as opposed to giving it to radio broadcasts. I know what radio broadcasts meaning the Europe-global communications systems -- satellites and so on and so forth.

That's one of the ways of bringing the two countries together. Is it going to solve your immediate problems on the nuclear issue, with terrorism and so forth? No. But it perhaps could help Iranians have a better understanding with the United States and Americans have a better understanding of Iran.

It's very difficult -- at this point, it's very difficult for Americans to go to Iran, because this is a country that has criminalized research. It equates research with espionage. So it's very difficult to do that at this point, but perhaps we can have greater number of citizens of Iran and in various American universities. That may have a good effect, it may have bad effect. Sayeeb Gott (sp) was here and he went back and became an inflamed Islamist. So I mean, you've got to watch who you're sending then.

NASR: I would just add one thing that, you know, the soft power -- in another sense, not just about Iran -- it's also about the region in which Iran is playing it's hand. First of all, there is the issue of Iranian soft power in an area that is of America's interest. And it's -- you could also think of, forget about Iran itself. We have to think much more smartly about what do we do about our soft power in the Arab world and the Middle East, in Pakistan and Afghanistan, which is the arena in which the Iranians are also playing and trying to exert influence.

And you know, the decline of American influence, the rise of anti-Americanism in the Middle East has not benefitted our policies -- not just toward the Arab world, but also towards Iran. And that's exactly why the Iranians can leverage this kind of bad behavior and translate it into political capital.

HAASS: With that, let me just do a couple of things. Let me thank these two gentlemen. As you can see now, I was not exaggerating when I said all those positive things about them.

Let me thank you all for your interest and your perseverance. Perseverance and interest, however, will be rewarded. There is a buffet lunch that is available precisely now. And I expect there'll be some hard food and soft food there for all of you. So thank you all very much. (Applause.).STX

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

GIDEON ROSE: Ladies and gentlemen, and children of all ages -- ladies and gentlemen, we are gathered here today to discuss the Iranian nuclear program and what to do about it. We are very fortunate to have with us two of the best experts around on what is going on, and what should be done about it -- Gary Samore and Ash Carter.

Their extensive, distinguished resumes and biographies are in your program, so I'm not going to take up too much time here reciting them. I will mention that Ash has a new paper out from the Center for a New American Security on "Military Elements in a Strategy to Deal with Iran's Nuclear Program." And those, and other publications of both of them can be found on-line at their various websites, and available outside the door as well for not of any fee.

Frankly, I'm exactly looking forward to this session greatly. I come from a, you know, small town nestled in the potato fields of eastern Long Island -- (laughter) -- and I have a little puzzled, but I'm curious that you've -- about helping, you know, having you elite, sophisticated types eating croissant at the Council on Foreign Relations, to help me -- (laughter) -- think through certain types of things.

I've been -- I've been watching the Conventions carefully, and I've gotten the sense that this Iranian nuclear thing is a problem. (Laughter.) But, I'm a little unsure what exactly the problem is, and which of these two alternatives -- simple, easy solutions to it, is the right one. Some people seem to think the problem is they're afraid of us, and so we can basically, calmly sweet talk them out of it. And other people seem to think the problem is they're not afraid of us, and so we can basically bully or bash them out of it.

Now, I heard very good cases for why each of these makes sense -- and you guys know all this stuff, so I'm curious to hear your take on -- we all know the existing policy is terrible, but which of the two simplistic alternatives that have been put on offer for us is the right one?

And with that, I'll throw it open -- let's start with Gary, and see if you can tell us why the diplomatic -- what's going on, in your opinion, and why the sweet-talking approach is the right one.

GARY SAMORE: Well, I think the sweet-talking approach is the right one if it'll work. But my view is that unless it's backed up with a very strong bashing alternative, it probably won't be successful. So, if I was going to answer your question -- which of the two, I'd say both. And the problem we've had is combining both.

When we were in a very strong position, right after we invaded Iraq, and Iran was very nervous -- so nervous that they were prepared to suspend some key elements of their nuclear program, we didn't take advantage of that opportunity to try and negotiate with them on terms that would have met our needs in the nuclear area.

Since then, as the situation in Iraq has deteriorated, as oil prices have increased, as there have been changes in domestic politics in Iran, the balance of power has shifted against us. And now it's the Iranians that are not particularly interested in a deal that would limit their nuclear program.

So, the challenge for the next administration, I think, is going to be to both engage Iran -- in terms that makes it difficult for them to say no, but at the same time increase the credibility of our ability to punish and threaten them if they do say no. And I think that's going to be very difficult to do.

ROSE: What's the basic problem in the first place, though?

SAMORE: I think the basic problem is they want a nuclear weapons capability and we want to stop them. And both sides have -- (laughter) -- perfectly -- and both sides have perfectly understandable reasons for those objectives.

From Iran's standpoint, there are a lot of advantages in have a nuclear weapons capability, both for defensive purposes -- because they may very well fear that they'd be vulnerable to external pressure or even U.S. attack if they don't have nuclear weapons, or a capability; but also because of their imperial interests in establishing themselves as the dominant power in the region. They think nuclear weapons, or the option to have nuclear weapons, is a very important instrument of power. And, finally, just in terms of mobilizing domestic support -- as we, as we heard in the first panel, it's a very important nationalistic symbol.

So, for all those reasons, I think the current leadership in Iran is deeply committed to acquiring a nuclear weapons option -- a capability. And this is a program that they've been pursuing for 20 years, so I doubt we're going to be able to talk them out of it in the sense that we can persuade them that it's a bad idea. But what we can do is create a package of incentives and disincentives that convince them to at least delay, or slow down or limit the program. And that, I think, is probably the best that diplomacy can achieve.

ROSE: You're confusing me a little bit, because I thought the problem was that they were a bunch of crazy religious fanatics who wanted to destroy and wipe out Israel. Isn't that the issue? You sound like -- you make it sound like it's a regular problem in nuclear proliferation, of the kind that we've been grappling with for, you know, generations now, rather than some entirely new existential threat that can't be handled with conventional measures.

SAMORE: Well, I think it -- I think they are acting rationally. And I think you can even argue that the current nuclear ambition is actually something that began during the Shah's period, when we had an ally, you know, ruling -- you know, ruling the government. So, in that sense, I think it does reflect a national interest primarily.

There is a concern that since this is a government we don't completely understand -- we don't understand the extent to which, you know, these sorts of religious extremism play in their decision-making that could lead them to act differently if they had nuclear weapons. I doubt that it would. I actually think they probably would behave like most nuclear powers behave.

But that's not necessarily something to be sanguine about. If you think about the Cold War, the Cuban Missile Crisis, we almost got into a nuclear exchange with the Soviets, and we're both rational powers. So, my concern is that in the Middle East, if you introduce nuclear weapons, not only Iran, and, of course in Israel -- and other countries are very likely to try to follow suit -- that kind of a situation is very unstable and could lead to nuclear use even though everybody understands deterrence and containment and so forth.

ROSE: Very interesting. Ash, you seem -- do you do nuance too? Is this what -- (inaudible) --

(Cross talk, laughter.)

ASHTON B. CARTER: Not as well as Gary does, but -- and everything he said is true, you know, you really have to let me count the ways that an Iranian bomb is a disaster. Number one, is that they might use it against us and against Israel. You already mentioned that.

But, it doesn't end there. I think possession -- even if they never use it, just simple possession is a disaster all by itself. I think it will change their behavior. I think it's a -- it is a shield behind which they will be emboldened to do things contrary to our interests, and to the stability of the region that they wouldn't dare if they didn't have the bomb.

I think Gary's absolutely right that this could be the beginning of a cascade, where their neighbors say -- who have foregone the nuclear options for decades, but always had it in the back of their mind -- Egypt, Turkey, Saudi Arabia, Syria will have to reconsider their decision, so far, not to have the bomb, if Iran gets the bomb. So, possession -- it's not just use, just possession is a problem.

And then there's -- we haven't talked about something -- third, but which Gary has done a lot of good work on as well, which is diversion. The current owners of the bomb may not be the ultimate owners and users of the bomb -- they may sell the technology; they may lose control of the technology; they may divert it to a third party who uses it. You know, this is uranium-235. It has a half life of 713 million years. So, once these cats make this stuff, it's around for many turns of the wheels of history. And who knows --

ROSE: Like Council members. (Laughter.)

CARTER: -- yeah, who knows who's hands they'll come into. So, I agree with Gary, it's a -- it's a big problem. But it's not just one problem, it's a complex. Each one of those things I just named is, all by itself, something to keep you up at night.

ROSE: Well, let me ask you a question, though. Again, I keep hearing the Israel angle of this, are you saying that the -- it's Egypt, Saudi Arabia, Syria, Turkey will be more scared of an Iranian bomb than they would be of an Israeli bomb?

CARTER: Scared and jealous -

ROSE: Why would the Iranian --

CARTER: -- scared and jealous -- and jealous too.

(Cross talk.)

ROSE: So, the Iranian bomb would --

CARTER: There's the Shiite bomb, there's the Persian bomb. I mean, all of it's -- it's a pride thing. It's not --

(Cross talk.)

ROSE: So, that would make them take actions that they didn't take in response to the Israeli development of a nuclear capability?

CARTER: Yeah. That was a close-run thing with respect to Israel but, yeah, it would add another weight in the pan. They're always balancing whether to go or not to go, and Israel's in the "go" pan, and this adds another weight in the "go" pan for all of those parties. I think it's quite clear.

ROSE: Okay, let's -- there are lots of things we can get to with that, but let's go back a little bit to the question of how things have gotten to this point. If everyone has -- recognizes what -- if everyone realizes what you're saying and has tried to stop this, why have all the things that we've tried not worked?

CARTER: Well, we haven't tried very much, so --

ROSE: So, we've been sitting around watching all this without actually trying this?

CARTER: Well, I observe -- and Gary knows this much better, and let me just say something and then turn it over to him because he's been thinking about the diplomatic option, doing really good work on that, and has a lot of actual, practical experience negotiating non-proliferation things -- but, to my way of thinking, we have had this policy of tough talk and incongruously weak action for some years now.

And, you know, diplomacy is about carrots and sticks, and the carrots haven't been there because the Russians and the Chinese and the Europeans haven't wanted to wield them. The carrots haven't been there. We haven't wanted to proffer them.

Our administration, near as I can tell, has been divided between a camp that wants to call Iran the "axis of evil," and so forth, and contain or isolate on the one hand; and another camp which would like to "give it a try," to talk them out of it. And we've had the worst of both worlds, where we've gotten the disbenefits of both of those policies -- the benefits of neither. And that's what happens when you have -- you're stymied. And that's just taking them. And then the Europeans, the Russians and the Chinese all have their own issues for why they have been ineffectual.

So, I don't think the experiment's been done, really. It's not that it's been done and failed, it hasn't been tried. Gary made a real interesting point a short time ago, which is, had it been tried in 2003, there's now some evidence that it might have worked. That's the real meaning of the 'ill-starred' NIE, which was otherwise appallingly worded and misleading.

But what it suggested was that in 2003 the Iranian leadership was looking at us invading Iraq -- and a little scared about that, but we seemed to be working with them in Afghanistan, and maybe an accommodation. There seems to be some evidence that had we jumped then we might have been able to talk them out of it. That was then; now is now. They've had the experience of fecklessness, and they probably think we'll huff and puff, but never really blow the house down.

SAMORE: I want to pick up on something Ash said. I think he's right that the Bush administration has tried diplomacy in a half-hearted way, but I also want to emphasize the structural obstacles to an effective international approach, and in particular, the different interests that the big powers have, and this is something the next administration's going to have to grapple with.

For the United States, and for our allies, it's very easy to put nuclear nonproliferation as the top objective -- and that's our principal focus, in terms of both incentives and pressures, but for other countries, whether it's the Europeans, or the Russians and the Chinese, nuclear nonproliferation is the competing interest against other interests they have. And, as a consequence, it's been very hard for the U.S. and its allies to form a coalition that was prepared to take really serious measures against Iran if they -- you know, if they refused to stop their efforts to try to acquire a nuclear weapons capability.

And, in particular, the Russians and the Chinese have been a very weak link in our efforts to try to mobilize U.N. Security Council action -- again, for reasons that make sense if you look at the world from the standpoint of Moscow or Beijing. That's not going to change for the next administration. The Chinese are still going to want to protect access to oil and gas from Iran; the Russians are still going to see Iran as part of the overall effort to balance American power; and we, as we heard this morning, there are all kinds of covert business interests that the Russians -- you know, that the Russian elite is trying to protect.

And I'm afraid the Georgia situation is going to tremendously complicate any efforts for the U.S. to form and effective coalition against Iran. If Georgia doesn't get fixed -- if that, in fact, spreads to a broader conflict with the Russians over Ukraine and other parts of the near abroad, it's really going to leave us on our own -- I mean, the U.S. and its Western, you know, allies without being able to count on the Russians to do much help.

ROSE: So, let me get this straight. It's a real problem. (Laughter.) It needs to be fixed desperately. There's a way we might be able to fix it with a well-calibrated, sophisticatedly deployed package of carrots and sticks. But we're not going to give the carrots, and we're not going to use the sticks, so we're back to square one.

SAMORE: Well, I think the next administration will have a chance to deploy a more effective package of carrots and sticks. And, you know, let me just mention -- on the carrots side, because I think that's a lot easier, as Ash said, the Bush administration has been divided. The Bush administration has supported the international offer to Iran to help their civil nuclear power program if Iran agrees to accept a 10-year moratorium on its enrichment program.

I think that's a very generous offer, and makes perfect sense if the real purpose of Iran's program was nuclear power -- that would be very attractive. Of course, that's not the real purpose of their program. But what the Bush administration has not been willing to do up to now is to throw into the pot U.S. willingness to improve U.S. bilateral relations with Iran -- lifting our bilateral economic sanctions; you know, normalizing political relations; giving some kind of security assurances.

Now, you know, I think those carrots are of mixed appetite for the Iranian regime, but to not have deployed those important instruments on an issue that we all agree is critical importance, that strikes me as a weakness in our position. And I think the next administration, whoever is elected, will be in a position, I hope, to offer to Iran a fresh start, a transformation in the relationship if Iran meets our needs on the nuclear issue.

To me, that part of the formulation is much easier. The harder part is how you back that up. And, ideally, we would want to go to the other big powers and say, we're going to make a much more generous offer to Iran to solve this nuclear issue, but if the Iranians turn down that more generous offer, we're counting on you to support stronger sanctions. And what I'm worried about is this Georgian crisis may have interfered with our ability to line up the Russians and Chinese beforehand to support sanctions if the Iranians refuse a more generous offer.

ROSE: Do you agree with what he said?

CARTER: Yeah, I do. I think it's worth a shot. I wouldn't put a high probability on its success. It needs to be tried. I'd just make two additional points about the diplomatic option. The first is, I'm not an expert on Iran, and I'm humbled by what I hear about this, sort of, "amoeba" that is the Iranian government. And so when you're negotiating with something that is that divided and amorphous, even the best diplomatic setting at the table doesn't guarantee success.

And that's related to the second point, which is, I think it's going to take us a little time, if we were going to try this route -- which, again. I don't put a high probability on its success, but I think we have to try it because you can't go on to the other things unless you've tried diplomacy and shown that diplomacy has failed -- you know, we don't, our government has not interacted with the Iranian government much at all. There was somebody -- Nick Burns, a friend of Gary's and mine, our top diplomat, had the job that Frank Wisner once had -- Frank's here -- said that there was, when he came into office, "half a person" in the State Department who dealt with Iran.

And it reminds me, if I'm a Defense person -- and there's an old story about a letter written to the secretary of the Navy by the MIT Chemistry Department before World War I, and they said, it looks like the field of chemistry is going to be very important in the upcoming war, and we would like to offer the services of the chemists. And the letter back from the secretary of Navy says, you know, thank you for your interest in national defense, and we appreciate your interest, but wish to inform you that the Navy has a chemist; -- (laughter) -- and we have somebody who works on Iran. But it was half a guy. (Laughter.)

So it's going to -- even under the best of circumstances, to figure out how to approach this amoeba would take a little bit of learning and some time and some willingness to probe and interact. And we haven't had that so far.

SAMORE: Could I just add one more thing, because I don't want to leave people too depressed. I do think that the transformation in Iraq could help strengthen our diplomatic position considerably, because the more that the Iraqi government looks stable, the more that it looks like U.S. forces can extricate themselves out of harm's way, the more it will become credible in Tehran that the U.S. would be willing to use military force if diplomacy fails.

Up to now, the Iranians have counted on our predicament in Iraq as protection against a U.S. military attack, because the Iranians could retaliate by stirring up trouble in Iraq by providing arms and, you know, and encouragement to their -- you know, to their allies in Iraq. So, the more that that option is deprived, the more we can credibly threaten the use of military force.

And I'm absolutely convinced, whatever you think about the wisdom of using military force as a last resort, unless the Iranians believe that's a real, serious possibility, I just don't think diplomacy can be effective. That doesn't mean that we should be threatening them publicly, but as they sit and calculate the odds, unless they believe that that's a real danger, I think whatever we put on the table by way of carrots and inducements is not going to be effective.

ROSE: You know, you're not supposed to make threats that you're not prepared to keep, if necessary. So, Ash, you know, this is the kind of thing you do, what exactly are the military options, and if they're so good and worth doing, why not just do them?

CARTER: You know, let me make a distinction first -- and this paper walks through all this, between a military option and military ingredients to real options. I make that distinction between -- because as you see, if you read this, and I'll say why in a moment, military action by itself isn't an option in the sense that it can settle the matter.

It can contribute to resetting the diplomatic table, I suppose you might say, and resetting the registers in Tehran. But it, by itself -- for reasons I'll explain in a moment, doesn't dispose of the Iranian nuclear program. So, you have to ask yourself, after military action -- what? And that's either a return to a diplomatic path, now made more plausible by the fact that you've shown you're willing to whack them; or, or to a strategy of containment.

But there are really just two strategies for dealing with the Iranian nuclear program, which is to talk them out of it; or get used to have them having it and adjust militarily. And so, as we think about military ingredients, of options, there are two options: Stop them -- what's the military ingredient to stopping them?; and contain and deter when they get the bomb -- what are the military ingredients to that?

Let me start with the first --

ROSE: Wait, that's three options, right? There's talk them out of it; there's stop them out of it by force --

CARTER: But, what I'm going to -- about to suggest is that doesn't really work out to be very practical. I mean, so the -- what everybody has in their mind when they talk about ending the nuclear program by military force is, most of the time, is an air strike on Yongbya, and it's now -- I mean, Yongbyon, sorry -- (laughter) -- (inaudible) -- on --

(Cross talk)

CARTER: -- on Natanz. That's more than a Freudian slip, this is analogized to --

SAMORE: (Inaudible.)

CARTER: -- to the Osirak strike by Israel in 1981, and to an air strike which I'd planned in 1994 -- Gary remembers this quite well; he was alternately intrigued and horrified by what we were doing -- (laughter) -- to strike Yongbyon, in North Korea if the North Koreans did not agree to stop, which they ultimately did.

Both of those air strikes would have been more decisive, in technical terms, than would a strike on Natanz. And, if I may take a minute getting --

ROSE: Sure.

CARTER: -- to support and say why, Osirak didn't end the Iraqi nuclear program either. It slowed it down, delayed it; drove it underground and in somewhat different directions. But Saddam Hussein persisted. What ended the nuclear program was, first, Desert Storm; then a decade of sanctions and inspections; and, finally, the conquest of Iraq. That's what ended the -- Osirak did not. Osirak gave time for the work -- for history to overtake Saddam Hussein's regime. So, it wasn't -- Osirak bought the time for other things. Osirak didn't end Saddam Hussein's nuclear program.

If we had done Yongbyon in 1994 -- what we were going to do was strike an operating reactor that had those fuel rods, that now, to my total dismay, another incompetence on our part, has committed -- the North Koreans have now turned into bombs. But, those fuel rods were, at that time, in an operating reactor. And it's not a trivial matter to take out an operating reactor, because you can create a little Chernobyl, and we were quite confident that we knew that we were going to be able to do that. That would have entombed those fuel rods in the rubble of a reactor. We would have taken out the reprocessing facility, the fuel fabrication facility, the other reactors under construction, sort of, everything associated with the North Korean nuclear program. And so what would the North Koreans had to do? They had to go dig this dirty stuff out of the rubble; rebuild a reprocessing facility; rebuild the reactors and start all over again. Now, they could have done that, but it would have taken some time.

Let's look at -- let's think about Natanz for a moment, what's going on in Natanz. In Natanz there are these centrifuges spinning, 3,000 of which, operated in the right way, for a year, to make a bomb's worth -- that is 25 kilograms of highly enriched uranium. And we could get rid of it in a night. I mean, the United States -- this paper goes through how we'd do it. The Israelis a little bit lighter, but also could probably do it. So, we could destroy that facility.

And if you believe, as most people do, that there are other parts of the Iranian nuclear program that are not at Natanz -- and probably parts we don't know about, but that Natanz is the fastest route for them to a bomb, then destroying Natanz will slow down them in getting to a bomb. By how much? A good reckoning might be maybe two years, or something like that, because what -- they have clearly thought about this, and they have the ingredients of a reconstituted program hidden somewhere else. And so they'll -- they'll start again.

So, you have to think about two scenarios here: One is the scenario that the NIE plays out, in which they're really after the bomb but they're going to play "cat and mouse" with us; and they're pretending only to lightly enrich, and just a little bit, and then they're going to get up to the point where they can quickly break out and enrich, and make a bomb's worth. That's path one; that's the path we're on now -- and, what people say, maybe five years or so and they'll get there, or some number of years, it's all a guess, or an estimate. The other path is we bomb them; they rebuild. And then, of course, all bets are off. They're not going to play "cat and mouse;" they're not going to be letting inspectors in; they're not going to -- you know, they're going to race.

Those two paths only differ by a couple of years, in terms of when they get the bomb. Said differently, a single strike by itself buys you a couple of years but doesn't dispose of the matter. So, how could you dispose of the matter? Well, you only dispose of the matter if that air strike slows them down long enough for something else to happen -- which is us to carry out the diplomacy, having shown that we're willing to use force; that diplomacy succeeding in ultimately ending the program. Or, you have to go back again and again, every time you find them. And you're talking about going back every year or every two years -- if you find what they're doing.

So, that's the sense in which bombing them now is not an option, in the sense that it ends the story. It begins a new chapter in the story, and you still have in front of you, fundamentally, two options, which is: talk them out of it, and get over it. You've changed the terms of talking them out of it, perhaps, by showing your willingness to bomb -- you've bought some extra time for diplomacy to work, but you're still fundamentally pursuing a diplomatic path.

Unless you go to option three, which is to invade the place. And let me just quickly say here that, you've got to remember, this place has, you know -- what, four times the number of people, and three times the land area of Iraq. And, we've just had the experience of conquering and governing big places in the Middle East, and there doesn't seem to be a huge appetite for that On top of which, even though we've had plans for the invasion of Iran as long as I've been associated with Defense, we don't have the ground forces now to do it.

ROSE: What makes you think that the response to an American, or an Israeli air strike would be limited to rebuilding the program, or coming --

CARTER: Oh, it wouldn't. It wouldn't. I've given you the pro, which is that you get a -- buy yourself a couple years. The cons are, (laughs) I think, quite large. They'll retaliate -- no kidding, they'll take action through proxies, and so forth. They'll try to disrupt Gulf shipping -- I don't think they'll succeed in doing that for long but, at any rate, they'll retaliate. That's number one.

Number two, there's every chance that using military action under the -- in the wrong way will not reset the diplomatic table, it will turn over the diplomatic table. That is, it will be a one-way exit from diplomacy, because the Russians, the Chinese and the Europeans are going to say, well, to hell with you, we're not -- you know, we're not on this train anymore. And we can't do a lot without them, just because we don't have the sticks without them.

And the third thing it would do is turn a generation of Iranians against the United States. And that's unfortunate because, as near as I can tell -- I'm willing to be corrected, the Iranian people are not anti-American, certainly not by the standards of much of the rest of the world with the current historical -- (laughter) -- and this is according to polling data, and so, and so forth. And, you know, you piss them off for a generation -- the way they did us when they took our hostages.

And so you're buying yourself, again, kind of a one-way street from diplomacy, and a one-way street from any hope of reconciliation with the Iranians as a people by taking this action. So, I, myself judge the pro is buying a couple of years, but it's even dodgy at that. That's not real appealing, in terms of a benefit. And the disbenefits are quite large. So I think the balance weighs against military action at this time in a sort of diplomatic vacuum. And I think that's the judgment that our government has made.

ROSE: Okay, so the military sticks aren't really there. The diplomatic and economic sticks are in the hands of other major powers that aren't interested in using them, and therefore they aren't really there. And the diplomatic, economic and other kinds of carrots are not going to be deployed by any U.S. administration that you know of, or at least it hasn't been.

So why do you guys -- to go back to what you were saying before, why do you think there is some real hope that a newfangled carrot-and-stick initiative might work? As George Kennan used to say -- (speaks phrase in foreign language) -- "Why is this time going to be different than all the previous times?" (Laughter.)

SAMORE: Well, look, I think it probably won't be. But I think the next administration has to make that effort before Iran reaches the point where they have a credible breakout capability. And the good news, again, just to not leave you all too depressed, is that even though Iran has been trying over the last two and a half years to move ahead as quickly as they can in their enrichment program, they're encountering enough technical difficulties.

We've made it harder, through export controls and sabotage and other, you know, actions so that we've complicated their program. It's still a very rudimentary capability. They've got 4,000 centrifuge machines that are spinning very inefficiently. They're producing about one to two kilograms of low-enriched uranium a day, which is very, very marginal capacity.

And, you know, I think we do have at least a couple of years before they reach the point that they would feel confident they could break out in a short enough period of time, as to say produce enough highly enriched uranium for a couple of bombs in a short enough period where we would not have the opportunity to attack them, because where I think -- I mean, Ash is absolutely right about the pros and cons of a military strike that is, you know, what I would call a preventive strike, a strike against a facility which is under IAEA safeguards, which is producing low-enriched uranium, which is ostensibly a peaceful facility. There are a lot of negatives.

However, think about a scenario. There are two other scenarios where military force might be used. One is a breakout scenario. Let's say that the -- which is sort of like the North Korean scenario we were looking at. Let's say Iran kicks the IAEA inspectors out of their enrichment facility. That's a pretty good indication that they're now trying to break out; they're now trying to convert that facility from the production of low-enriched uranium to the production of weapons-grade uranium.

And in the period of time it will take for them to produce a couple of bombs' worth -- which could mean, depending upon the size of this facility, could be a couple of months -- I think a military strike against that facility in that window is much easier to justify, you know, internationally and domestically.

The second scenario, which we've seen very recently, is the Syrian scenario, where the Israelis bombed a secret nuclear facility. And again, the international reaction to that was marginal, and it didn't in any way interfere with subsequent peace talks between Israel and Syria. So if we were to identify a secret facility, you know, in Iran, or if we or the Israelis or someone took military force against that, again, I think that's much easier to argue in favor of.

So, you know, to me the military options -- we shouldn't just look at the most difficult case, which is a preventive strike against an ostensibly peaceful facility. We also want the Iranians to believe that if they actually try to make nuclear weapons, or if they build secret facilities that we detect, they run the risk of being attacked.

CARTER: I agree with that, but I just need to say something about that so you don't misinterpret. Everything that Gary says is absolutely right. There are circumstances -- I don't mean to say military action is not advisable under all circumstances. I'm saying there's no military option that settles the matter, including the two that he just adduced.

You're still back to the issue of what do you do about the Iranians if they want to get the bomb, and you either keep bombing them or you keep talking to them. And you may have reset the terms by taking military action, but you're not out of that dilemma entirely. That's my only point about saying it's not an option. I think it's an appropriate part of a coercive diplomatic strategy.

Point two is military action -- I think Gary would readily agree to this -- in a diplomatic vacuum -- that is, without a strategy and without an idea of where it leads -- is the worst of all possible worlds, because it doesn't achieve much and you get all the blow-back.

So if we're going to do this, we have to set the terms so that it is in a diplomatic context and it's clearly the consequence of the Iranians' failure to accept reasonable diplomacy. Then it might be advantageous to not only threaten to do it but to do it. But in the current circumstances, where that context isn't there, you get the small technical advantage and all of the disadvantages.

ROSE: Could the Israelis do it if we didn't want them to?

SAMORE: I would say yes.

ROSE: Even if we refused to give them the codes?

CARTER: Well, they don't have to fly over air space that we control. They can fly over Turkey. They can fly over Saudi Arabia. There's even some reports that they might have had some discussions with the Georgians, to use Georgian airfields.

There are four routes, at least, for Israel. Israel -- it's not as good as if we do it because the scale available to them is not as great. I think they can do it. I think they can do it without the complicity in advance of anyone, including ourselves. By "do it," I mean do the Natanz. They can't do anything as extensive as we could do.

It's gone through in this paper how they do the refueling and so forth. And for them, the regrets are less, because they don't have to worry about turning the Iranian population against them. The Iranian population is already against them. They don't have to worry about upsetting a delicate multilateral diplomacy that they're involved in, because they're not.

ROSE: Isn't that precisely the point, which is, isn't there a moral hazard issue here, which is if the Israelis have less incentive to worry about the consequences and perhaps more incentive to favor a short-term setback, aren't there things --

CARTER: They're more likely to do it than we are. I've said that between our elections and the inauguration of our president, I'd put 50-50 the Israelis to do that.

ROSE: And if the U.S. government decided that it was not a worthwhile thing to do, there is nothing it could do to prevent the Israelis from doing it? Is that what you're telling me?

SAMORE: No, I don't think that's what Ash is saying. We can certainly try to discourage the Israelis. And, in fact, there's some evidence that this administration has been doing just that; that in June and July, when, you know, there were reports of Israeli practice runs over the Mediterranean and when there were public statements being made that were very belligerent, as I understand it, the U.S. government has tried very hard to argue with the Israelis that this is not the right time, not to say never, but that right now would not be an appropriate time to launch an attack.

And I think one of the difficulties we have in our diplomatic strategy is that, on one hand -- and I think you mentioned this, Gideon -- we want the Iranians to believe that the military force is a real option, but we also have to be very aware, as Ash has pointed out, of all the limitations and the risks that we run.

So how you use that instrument as a political instrument without, you know, inadvertently making it more likely that it's used when we don't actually want it to be used is a tricky balance.

ROSE: So the Israelis are our madman theory.

SAMORE: Well, yeah, I mean, in theory, you'd like to do that. But I think --

ROSE: Don't ask us, because who knows what the Israelis might do.

SAMORE: We will certainly make that argument, and I think it's a credible argument, for all the reasons that Ash has pointed out. The Israelis are much more sensitive to the risk of Iran having a nuclear capability and genuinely see that as an existential threat, which it isn't to the United States. And the Israelis are much less sensitive to the possible consequences and blow-back.

So it's a good diplomatic instrument. But we have to be careful when we use that instrument that the Israelis don't see that as a green light to go ahead and strike, you know, before we're ready to have that actually happen.

CARTER: There's another layer of this too. It's absolutely right. And the green light is not only to the Israelis, but if we are seen to have given a green light, then we get all the negative consequences as though we had done it ourselves. And so if everybody's going to think we did it, we might as well just do it, because we'll do a better job. But there isn't a soul east of Morocco who won't think we didn't have something to do with it if the Israelis do it. That's the dilemma for us.

ROSE: I used to think that we were the great (power patron ?) in this relationship, but I guess not. (Laughter.)

Okay, let's turn it over to you guys. Herb Levin.

QUESTIONER: Last night, after McCain finished, I had a lot of reading to do, so I left it on. And I got all of these people talking up there at the convention who I had never heard of before, will never hear of again, and they were all reading things that had been supplied to them, obviously, by the brain trust of the Republican Party.

And there was a theme, and the theme was that McCain would never compromise with evil. He would never sit down with evildoers. He would never compromise. And we must absolutely elect him and stand firm, because these other guys, they believe you can work things out with people who are fundamentally evil. And we're going to have 40 votes in the Senate. We can block anything serious, and that's really what we must work for.

So I thought that those who do not believe in negotiations in the past eight years have been a little bit restrained when the president wanted to negotiate, but they will have no restraints, should there be a Democratic administration. And this was well-coordinated. You guys all had gone to bed. But you certainly shouldn't talk to the Iranians, for many reasons. And there are even people who wanted to push over Burma, who wanted to talk to the Cubans. The North Korea negotiations had been a disaster. And, of course, people wanted to sell out Taiwan to the Chinese.

And I thought, where do you get support? You've talked about the failures, potential failures, pitfalls, of violence. Where are you going to get support for a serious diplomatic strategy? And when you have the Democrats apparently willing to support Bush's initiative to have the Indians build more nuclear weapons and test them with our blessing, under that argument, where is support for the kind of strategy that you're talking about, and what is the strategy?

ROSE: Try to keep your answers shorter than the question. (Laughter.)

SAMORE: Well, you know, I think what candidates say during the election is not necessarily a good guide to what they'll do once they're in office. I know this is a shock to you. And I -- you know, I mean, I always believe that at the end of the day, the U.S. government tries to do the most sensible thing.

So I think there's a pretty good chance that whoever is elected will try something like the kind of diplomatic strategy we've talked about, which frankly is building on the current strategy. I mean, if you ask the Bush administration what's their diplomatic strategy, it's carrots and sticks. It's the use of inducements, threats, intimidation, persuasion; I mean, all the instruments that we normally use in diplomacy. It's just that they haven't done it very efficiently.

And the obvious approach, since we're nearing a point where it would be too late for diplomatic action to be effective in stopping Iran's program, the obvious approach is to try to enhance that package with better carrots and more threatening sticks.

So I actually think that an Obama administration and a McCain administration is likely to pursue a very similar strategy, which will seek to build on the current approach and try to fine-tune it in a way that makes it more effective. As we've all said, it may very well not work, and then the next president will face a very difficult choice between either accepting that Iran will have a breakout capability and hoping to erect barriers to prevent them from actually making nuclear weapons, or taking military action with all the risks and -- (inaudible) -- we've talked about.

CARTER: Can I just say something about that? I hope you're right. John McCain, at least judging from what he said about Iran, but also about North Korea, really does believe that talking with evil is -- and I respect that point of view; I have a different point of view, which is I have the same feeling about North Korea, which is I think it's more evil to let them get nuclear weapons than to try to deal with them.

I wish that North Korea had a different government. Its people deserve a better one. I wish Iran had a different government. But I don't know how to change it. And it looks to me like they're going to have that government long enough to get the bomb. And so talking about changing the regime really doesn't answer the question, which is, "What are you going to do about nuclear weapons?"

So I hear this, "I don't like to talk to evil people," and so forth, and I certainly respect that point of view. But my answer to that is, what's the second sentence in that paragraph? What are you going to do about the bomb? Is what you're saying you're just going to let them get it? That's really what I infer from a statement like that is that we will let Iran get the bomb and then we'll figure out what we do after that.

That, to me, is too dangerous a path. And I'm willing to try something else, even dealing with people whom I wish weren't governing the country they are in order to head that off. I just don't think that that's an analytically sound -- it's a stance, but it's not a policy.

ROSE: We've got a pair of questions. We'll get as many as possible. Please keep them succinct. Over here -- Alan Gerson and Frank Wisner.

QUESTIONER: Alan Gerson.

Ashton, you said that the odds of an Israeli strike before January are about 50-50. And you also said that even if Israel were to strike, if I understood you correctly, without U.S. authorization or an amber light, it would be perceived, certainly by the Iranians and the rest of the world, that the United States did provide such authorization.

Given that, would you venture another calculation as to what the odds are that the United States would feel compelled to come in and finish the job if the Israelis began it?

ROSE: And Frank.

QUESTIONER: I wanted to tell both of you how much I've appreciated what you've said today and the analysis you've brought, the arguments you've advanced for a case of engagement, which I'd like to think is the only rational way forward.

At the same time, I'd like to add a thought that flows from your arguments, and that is, treating the nuclear issue as separate from the overall question of our strategy towards Iran will undermine our capability to deal with the nuclear issue.

But once we do turn to the nuclear issue, I would argue, as part of the whole, have you all looked at, thought about the consequences of the arguments advanced by Bill Luers, Tom Pickering and Dr. Walsh regarding a deal that would end up with Iranian enrichment capability inside Iran but under international supervision and international and Iranian mixed ownership? Does that have a space in your logic as a way through this otherwise extremely difficult puzzle?

ROSE: Either one of you?

SAMORE:

CARTER: Well, I mean, you asked a good question, and I suggested that myself. If you thought the Israelis were going to do it and you were going to suffer -- we were going to suffer most of the blow-back anyway, we would do a more competent job carrying it out ourselves. So there's a certain logic to that.

Your question was, do I see that logic prevailing? No. I don't look -- and this is tea-leaf reading, so I don't know; I'm not in the administration. But I see the administration having done the analysis I did, which suggests that this doesn't get you a whole lot under the current circumstances. And if you're going to do it, you want to do it in the right circumstances, number one.

And number two, I see the lineup of the personalities of the administration. I mean, it was different when Don Rumsfeld was there and Dick Cheney and they had a kind of tag-team relationship. Bob Gates, Mike Mullen, the chairman -- I mean, if you listen to what they've been saying, they've been more or less saying, "We've got our hands full and would rather not get into this kind of thing." Condi Rice is trying to end her term on a negotiating note instead of a bombing note. That seems quite clear.

So I don't see -- you know, the decider can still decide to do whatever he wants, but there is around him a group of people whom I think will be suggesting that this is a good idea. So both for the reasons that it doesn't seem analytically to make a lot of sense and because of the current constellation of personalities and where they seem to be at, I don't see the United States -- (inaudible). So I would not -- I tell people I see the odds of us doing it before the end of the Bush term as very small. I put the odds of the Israelis doing it between the election and the inauguration considerably higher.

SAMORE: Well, I think Ambassador Wisner is absolutely right that we can't address the nuclear issue in isolation. We have to figure out a way to address it in the context of all the other issues that we have on the table with Iran. Now, unfortunately, that means both issues where we might have common interests, but also a lot of interests where we have different interests, including support for Hezbollah and Hamas and support for the peace process and regional security arrangements and other issues. So even though that complicates the situation, I think it's important that when we approach Iran, it has to be in the context of trying to deal with the overall relationship.

On the second question, Ambassador Wisner asked about the idea of an international enrichment facility located on Iranian soil. Well, that's what the Iranians are proposing, although they haven't been very precise about exactly what that would look like in terms of international ownership and participation.

From my standpoint, that's a pretty undesirable outcome, because I think it gives Iran what they want. I think it gives them a base of capacity to produce nuclear weapons, and they could use that kind of international facility in two ways. First of all, they could nationalize it and actually produce weapons-grade uranium at that facility, and we would have helped them or we would have participated in the construction and operation of that facility. So I think we would look pretty foolish in that case. And, of course, there's a history in Iran of nationalizing industry, so this is not unprecedented.

But secondly, I think much more likely, if they had a huge facility on their soil, that would mean training a lot of people. That would mean producing a lot of components and materials to run that facility. And I think that creates many more opportunities for them to build a covert facility and break out in a way where there wouldn't be any warning.

Now, the argument in favor of an international facility is that we would have people or there would be people from western countries on the ground in that facility, and therefore we would be in a better position to keep tabs.

I think that's true, but to me that advantage is outweighed by the opportunities it creates for Iran to cheat. And I think we have to recognize, in a realistic way, that any agreement where you're talking about obstacles to diplomacy, and just as with the North Koreans, you have to assume that any deal we make with the Iranians, there's a pretty high risk that they will cheat on it. And certainly their record of cheating on the NPT can't give us much confidence that they would actually abide by any agreement. So we have to keep in mind the importance of verification.

So to me, the sort of international, you know, multilateral facility in Iran, I think you could probably negotiate that since that's what the Iranians are proposing. But I don't think that's a diplomatic outcome that would give us much happiness.

ROSE: Gary Sick back here, and over here.

QUESTIONER: (Off mike) -- Israel can bomb Iran, and the United States will not be held responsible for it and that the retaliation against us, we can just sit there on our hands and do nothing. If it's 50-50 that they attack, it's 50-50 that we go to war. And I don't believe it, frankly. But my question is, Gary has been very careful of always saying a nuclear capability, and Ash has just said bomb.

Is this a distinction without a difference? I mean, having a nuclear capability is different than having a bomb? What is the difference, and what is actually --

SAMORE: Yeah, yeah --

ROSE: We're pairing them. We're pairing them.

SAMORE: I'm sorry.

ROSE: Over here.

QUESTIONER: (Off mike.)

ROSE: Hold on a second. Wait for the microphone, please.

QUESTIONER: I guess what I'd like some clarification on is the question of Israel and the role Israel could play in a military strike on Iran. The way that I've understood you guys talking is that the only deterrent to Israel bombing is the U.S. pressure for it not to.

And what I'm wondering is, is there any other deterrent in terms of, you know, the possibility of blow-back from Hezbollah, Syria, Hamas, the various complements of what Israel is going through right now? Is that a deterrent at all? Does that play a role? Is it a question of America holding back Israel at some point either letting it go or Israel becoming sort of the tail that wags the dog in this situation? If you could sort of explain that, I think it would help in understanding the 50-50 situation that you brought up.

SAMORE: Well, let me start. You know, perhaps I should -- you know, I made this distinction more clear earlier. You know, I think there's a big difference between a capability and the bomb. And what the Iranians claim they're seeking is a capability. Of course, they say that program is purely peaceful, intended to produce low-enriched uranium for nuclear power reactor fuel.

But privately, I've had Iranian officials say that they live in a dangerous neighborhood; they're surrounded by countries with nuclear weapons, including India, Pakistan, Israel, Russia, and the U.S. is there, and they need to have an option. They need to have -- for their own survival and security, they need to have the ability in extremis to build nuclear weapons. And that means they need to be able to produce fissile material, either enriched uranium or separated plutonium. And if they build a large -- you know, if they build a large enrichment facility, that will inherently give them the option of converting and using that facility for the production of weapons-grade uranium.

Now, they say they would never actually build nuclear weapons, because they know that would scare the neighbors and it could risk war, you know, and it could cause a nuclear arms race in the region. So sort of the Iranian position is, "We'll be content with a latent capability, with a breakout option, but we'll never actually use it." I don't believe that. I mean, I think once the option is available, at some point the temptation to actually have real nuclear weapons on missiles will be so overwhelming that it can't be resisted.

And we've seen other countries that have made similar arguments. I mean, India, for example, for many years argued, "We don't want nuclear weapons, but for our status and our sort of protection in extremis, we need to have the option to build nuclear weapons." But eventually the desire or need, perceived need, to have the actual bomb became overwhelming. And I think in the case of Iran, my guess is a similar process would take place.

CARTER: I agree with that. He just uses -- he explains things better than I do. (Laughs.) It's the only thing I'd say about it.

Your point is a -- I mean, it's not just that they would be putting their best ally in a really tough spot, as Gary says, that deters the Israelis. I mean, they can do the math as well. They know that this doesn't end the story. They know that there would be retaliation against them. So again, taking out Natanz isn't the end of the story for anybody. And the Israelis know that that's true for them, as well as for us.

So I think there are many things that go into their calculus, but presumably one of them is, if we're right that our government has been suggesting that this would be an unwelcome development for the United States because it would immediately embroil us in something we didn't instigate, hadn't thought through and hadn't positioned ourselves to withstand, that's an unfriendly situation to be in. But I think there are other things as well that go into that calculus. But the balance is not as sharp as it is for us, which is why I'm wondering whether they won't, in fact, decide that the balance is in favor.

ROSE: I really find you guys astonishingly cavalier about this, I mean, given the extraordinary leverage, potential leverage we have vis-a-vis Israel. Any U.S. administration that decided it was not prudent to strike Iran and allowed Israel to do so anyway would be guilty, in my opinion, of a gross malfeasance in the advancement and securement of the American national interest. I cannot imagine that taking place if we truly used the leverage in advance to make that clear. It's not something that would be an unfriendly act. It would be getting into a war that we had chosen not to start. But that's just my take.

I'm curious here -- we have several who want to get into this. Over here, and then back there.

CARTER: You can't let that stand. Cavalier, Gary was not. Gary made the point earlier that it may be a dangerous game, but the game in which the Iranians wonder whether the Israelis are going to do something has some value. So you've got two audiences out there. You've got the Iranians, whom you might wish to think this might happen, and the Israelis, whom you might wish to think this would not be such a good idea. And that's a sporty game to play, but it's not an unreasonable game to play. So I --

ROSE: But that's using Israel as a threat. I thought you said -- you said you thought there was a 50-50 chance that there would be an Israeli strike.

CARTER: Yeah.

SAMORE: You know, I think that we may not have an opportunity to use our full leverage to dissuade Israel. If we decide that we think an Israeli attack is not in the American interest, I think it will happen in a way so that we will not have the kind of advance warning that would allow us to take effective action.

So you lay the cards out now. "Here's what will happen if you do this when we say, 'Don't do it.'" But, you know, as I say, I don't think the U.S. government wants to act in a way that precludes the threat, because we're using the threat as a political instrument.

CARTER: And that's what I'm afraid gets misplayed.

ROSE: You're going to get a chance next session, so over here and then back there.

QUESTIONER: (Name inaudible) -- Council on Foreign Relations.

Being an Iranian myself, and having spoken to countless Iranian diplomats and former Iranian candidates for presidency and Iranian dissidents here, there is a current denominator, common denominator, for the argument of carrots and sticks, and that is that the Iranians want America to recognize Iran.

There is an element of recognition that's very, very important to the Iranian people, whether they're here, whether they're in Iran. And I wanted both panelists to please shed some light on this. To what extent do we see this happening? Is this a viable carrot, and do you see this as a lever to change this game in our favor? Thank you.

ROSE: And then back here.

QUESTIONER: Jim Dingman, INN World Report.

One could argue that in the spring to the end of 2003, the Iranian Revolutionary Guard Corps and the political assets that had been built up for 15, 16 years were deployed to Iraq to aid and abet those who were coming up and upsurging in the crazy environment of that time.

I want you to specifically talk about what you think would happen in Iraq and Afghanistan if, whether the Israelis did this unilaterally or we did it unilaterally, we attacked their nuclear facilities. What would happen on the ground in both those situations, in your minds?

SAMORE: Well, let me first comment on the psychological element of engagement. I do think it's important for the Iranian public to feel a sense of respect and recognition from the United States. And I think that's a relatively easy, you know, price for the U.S. to pay, although sometimes I wonder, when the Iranians talk about recognition of their importance and respect, I often wonder how they translate that into real terms.

I mean, sometimes when the Iranians talk about, you know, recognition of their status as a leading power in the region, that means that the U.S. can't have any military bases in the Persian Gulf, which is a nonstarter. So I think it's important that -- you know, it's very easy I think to convey respect but sometimes that is used by the Iranians as a subtle way of getting at much more important issues, and that's something that you can only tease out in the course of diplomacy, which is why it's important to talk to them and find out what it means.

You know, in the case of Iraq and Afghanistan, what would the consequence be, I think it's very difficult to anticipate, but what I was trying to say earlier is that the situation we face in Iraq now appears to be more impervious to Iranian retaliation and the consequences in the street in terms of a threat to the Iraqi government. I mean, presumably, the Iraqi government would disown any support for a U.S. or Israeli military attack because it would obviously -- at least with much of the Iraqi population it wouldn't be popular. With some of the Iraqi population, the Sunnis much actually be quite happy, quietly.

You know, so I think that we're at, you know, I guess the general thing I would say is the better things look in Iraq and Afghanistan in terms of U.S. forces not being in harm's way, and the more stable those governments look, the less opportunities and options the Iranians would have to retaliate. They'll clearly try to retaliate through proxies and allies in both places, but part of the balance of power is the extent to which we appear to be in a position, you know, to, you know, to withstand whatever retaliation they can take in response to an attack.

CARTER: Can I just say something?

SAMORE: Sure.

CARTER: First, I thought that was absolutely a good answer to the second question, there will be consequences in Iraq and Afghanistan, I should have mentioned that earlier. But you raised something that's very, very important and Frank Wisner does as well which is whether there's a possibility of a diplomatic breakthrough that is more comprehensive than one just dealing with the nuclear question. You could say it differently which is can you even hope to have an agreement with Iran that is isolated to the nuclear, or would it have to be some broader kind of accommodation?

You know, we're used to arms control with the Soviet Union, and the premise of arms control in the Soviet Union was we're going to talk about weapons and everything else is going to stay the same. You know, we're still a cold war, we're still antagonists but we're going to deal with this little problem together. And that worked. That was more or less the way it was done with North Korea under the agreed framework. We hate you, you hate us, we're not going to trade with you, we're not going to relax any other kind of pressure on you, keep you on the terrorist list that trade with the enemy, this was back in 1994, but we're going to make this little deal about nuclear -- this one little issue about nuclear weapons. That's type A of agreements.

Type B is where there's a general relaxation of pressure by the West against Iran in return for a comprehensive change in conduct on behalf, that's a bigger deal. Frank's raising that prospect, can you have the former in this case without the latter, or can you imagine a circumstance where the cold war essentially with us and Iran continues but we make a deal about this little thing called the nuclear program. I don't know whether the little one is possible without the big one, and if it's not possible without the big one and you can hardly imagine the circumstances in which the big one gets done, then that turns you into a pessimist about diplomacy.

ROSE: Okay. We're going to have one final batch of three. Over here, over there and back there.

QSince Iran is aware of the Israelis' threat too, the hour after Israel bombs Iran, then who bombs Israel on behalf of Iran, and where does Condi Rice first go? (Laughter.)

QGiven the persistency of the level of threats by the Iranians, are the Israeli's correct in your judgment, that this is an existential threat to them?

ROSE: And back there.

QJust going back to the question of making a bigger deal than the nuclear issue, is there a medium alternative or middle alternative to all this situation, the possibility of making a deal on the nuclear issue because nuclear issue is so important, and then putting on the table important concessions on the part of the United States, including -- and I want to be concrete -- full diplomatic relationships, the possibility of lifting sanctions while leaving some other issues that the United States and Iran have difficulties with on the table?

ROSE: Those three plus any final comments you might have. And one little addition which is if it is an existential threat, is it different from the one that the United States lived through for half a century during the cold war?

SAMORE: Right. Do you want me to --

CARTER: Sure, go ahead.

SAMORE: Well let me say first of all I think, you know, I completely agree that in pursuit of a nuclear deal, we should be prepared to put on the table the offer of improving, you know, our bilateral relations which would include lifting economic sanctions, normalizing political relations and so forth. Now the argument against that which the Bush administration has used is that once you play those chips, that weakens your hand to deal with all the other problems we have, whether it's support for Hezbollah or opposition to the peace process or you know whatever and I think that's true, it's a valid argument.

But for me the nuclear issue is so important, that I'd be willing to play those chips or at least see whether that would work. Maybe it won't, but I think you've got to make a decision how you use the cards in your hand, and I'd be prepared to use them.

You know, on the existential threat, I'm very sympathetic with Israel's belief that it's an existential threat. And, you know when you talk to Israeli strategists, I think it's very unlikely that Iran is going to wake up one morning and decide to destroy Israel by using nuclear weapons because the Iranians understand that Israel can retaliate in a way that would destroy Iran. But they believe that there's a small possibility, whether it's escalation, accidental use, miscalculation, diversion, plus the fact that Iran would act much more aggressively if it had nuclear weapons, but that isn't -- poses an existential threat to Israel. And given Israel's history, I think there's a tremendous sensitivity to the possibility that the entire population could be destroyed.

So I completely understand why Israel views it that way. It's not I think quite the same as the U.S. and the Soviet Union, you know, and therefore I think it's, you know, completely understandable why they would be much more willing than other countries to use military force in order to try to prevent that threat.

And, you know, I've also heard Israelis say that, you know, they wouldn't be so worried about, you know, Iran having nuclear weapons if there was a different government, so it -- I mean, a different government in Iran. So it's not the mere fact of Iran having nuclear weapons, it's the fact that it's seen as such a hostile government.

Was there one more question? Oh, yes, about -- you know, the Israeli calculation is that Iran's ability to retaliate against Israel will be limited, both by choice and by necessity, that Iran is not likely to, you know, shoot missiles at Israel because Israel can retaliate and the retaliation's likely to take the form of action through proxy. And the Israelis think they're prepared to withstand that and deal with it.

ROSE: And any final thoughts?

CARTER: Well, I said it at the beginning, it's not just use, its use, possession and diversion. We didn't worry about diversion from the Soviet Union, we have about Russia, I ran the Nunn-Lugar appropriation -- (inaudible) -- and you heard a lot about it after the fall but -- and it followed a state you didn't worry about use control.

And Russia -- and as far as leading to further proliferation, you know, Russia became our partner in stopping further proliferation. So this is, you know, different and more dangerous and I take it very seriously. You know, you can't say you can't live with something that you may have to live with and I have in this paper what we all have to do if Iran gets the bomb, but it's really a very unfortunate circumstance.

We already have that with North Korea, we've seen that in the last seven years, we're going to look back and very deeply regret that, just as we look back now -- I don't know how you feel, but I'd do anything to be able to turn back the clock and stop Pakistan from having a bomb because under the current circumstances, that is a huge worry.

What's down the road for Iran? As I said, it's the half life 713 million years for plutonium, 24,400 years? I mean, you know, the supreme leader ain't going to be around that long. (Laughter.) It'll be somebody else who has this. And so you're creating -- you're casting a shadow over humanity for a very long time every time a bomb is introduced to the world. And it's not that, you know, we're better people than the Iranian people are in some fundamental sense. But every time you put one of these things out there, you're creating a lasting danger.

ROSE: Well, on that cheerful note, we will -- (laughter) -- kick the can to the next session to how to actually resolve it all and we'll see you back here in 15 minutes.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

GIDEON ROSE: Ladies and gentlemen, and children of all ages -- ladies and gentlemen, we are gathered here today to discuss the Iranian nuclear program and what to do about it. We are very fortunate to have with us two of the best experts around on what is going on, and what should be done about it -- Gary Samore and Ash Carter.

Their extensive, distinguished resumes and biographies are in your program, so I'm not going to take up too much time here reciting them. I will mention that Ash has a new paper out from the Center for a New American Security on "Military Elements in a Strategy to Deal with Iran's Nuclear Program." And those, and other publications of both of them can be found on-line at their various websites, and available outside the door as well for not of any fee.

Frankly, I'm exactly looking forward to this session greatly. I come from a, you know, small town nestled in the potato fields of eastern Long Island -- (laughter) -- and I have a little puzzled, but I'm curious that you've -- about helping, you know, having you elite, sophisticated types eating croissant at the Council on Foreign Relations, to help me -- (laughter) -- think through certain types of things.

I've been -- I've been watching the Conventions carefully, and I've gotten the sense that this Iranian nuclear thing is a problem. (Laughter.) But, I'm a little unsure what exactly the problem is, and which of these two alternatives -- simple, easy solutions to it, is the right one. Some people seem to think the problem is they're afraid of us, and so we can basically, calmly sweet talk them out of it. And other people seem to think the problem is they're not afraid of us, and so we can basically bully or bash them out of it.

Now, I heard very good cases for why each of these makes sense -- and you guys know all this stuff, so I'm curious to hear your take on -- we all know the existing policy is terrible, but which of the two simplistic alternatives that have been put on offer for us is the right one?

And with that, I'll throw it open -- let's start with Gary, and see if you can tell us why the diplomatic -- what's going on, in your opinion, and why the sweet-talking approach is the right one.

GARY SAMORE: Well, I think the sweet-talking approach is the right one if it'll work. But my view is that unless it's backed up with a very strong bashing alternative, it probably won't be successful. So, if I was going to answer your question -- which of the two, I'd say both. And the problem we've had is combining both.

When we were in a very strong position, right after we invaded Iraq, and Iran was very nervous -- so nervous that they were prepared to suspend some key elements of their nuclear program, we didn't take advantage of that opportunity to try and negotiate with them on terms that would have met our needs in the nuclear area.

Since then, as the situation in Iraq has deteriorated, as oil prices have increased, as there have been changes in domestic politics in Iran, the balance of power has shifted against us. And now it's the Iranians that are not particularly interested in a deal that would limit their nuclear program.

So, the challenge for the next administration, I think, is going to be to both engage Iran -- in terms that makes it difficult for them to say no, but at the same time increase the credibility of our ability to punish and threaten them if they do say no. And I think that's going to be very difficult to do.

ROSE: What's the basic problem in the first place, though?

SAMORE: I think the basic problem is they want a nuclear weapons capability and we want to stop them. And both sides have -- (laughter) -- perfectly -- and both sides have perfectly understandable reasons for those objectives.

From Iran's standpoint, there are a lot of advantages in have a nuclear weapons capability, both for defensive purposes -- because they may very well fear that they'd be vulnerable to external pressure or even U.S. attack if they don't have nuclear weapons, or a capability; but also because of their imperial interests in establishing themselves as the dominant power in the region. They think nuclear weapons, or the option to have nuclear weapons, is a very important instrument of power. And, finally, just in terms of mobilizing domestic support -- as we, as we heard in the first panel, it's a very important nationalistic symbol.

So, for all those reasons, I think the current leadership in Iran is deeply committed to acquiring a nuclear weapons option -- a capability. And this is a program that they've been pursuing for 20 years, so I doubt we're going to be able to talk them out of it in the sense that we can persuade them that it's a bad idea. But what we can do is create a package of incentives and disincentives that convince them to at least delay, or slow down or limit the program. And that, I think, is probably the best that diplomacy can achieve.

ROSE: You're confusing me a little bit, because I thought the problem was that they were a bunch of crazy religious fanatics who wanted to destroy and wipe out Israel. Isn't that the issue? You sound like -- you make it sound like it's a regular problem in nuclear proliferation, of the kind that we've been grappling with for, you know, generations now, rather than some entirely new existential threat that can't be handled with conventional measures.

SAMORE: Well, I think it -- I think they are acting rationally. And I think you can even argue that the current nuclear ambition is actually something that began during the Shah's period, when we had an ally, you know, ruling -- you know, ruling the government. So, in that sense, I think it does reflect a national interest primarily.

There is a concern that since this is a government we don't completely understand -- we don't understand the extent to which, you know, these sorts of religious extremism play in their decision-making that could lead them to act differently if they had nuclear weapons. I doubt that it would. I actually think they probably would behave like most nuclear powers behave.

But that's not necessarily something to be sanguine about. If you think about the Cold War, the Cuban Missile Crisis, we almost got into a nuclear exchange with the Soviets, and we're both rational powers. So, my concern is that in the Middle East, if you introduce nuclear weapons, not only Iran, and, of course in Israel -- and other countries are very likely to try to follow suit -- that kind of a situation is very unstable and could lead to nuclear use even though everybody understands deterrence and containment and so forth.

ROSE: Very interesting. Ash, you seem -- do you do nuance too? Is this what -- (inaudible) --

(Cross talk, laughter.)

ASHTON B. CARTER: Not as well as Gary does, but -- and everything he said is true, you know, you really have to let me count the ways that an Iranian bomb is a disaster. Number one, is that they might use it against us and against Israel. You already mentioned that.

But, it doesn't end there. I think possession -- even if they never use it, just simple possession is a disaster all by itself. I think it will change their behavior. I think it's a -- it is a shield behind which they will be emboldened to do things contrary to our interests, and to the stability of the region that they wouldn't dare if they didn't have the bomb.

I think Gary's absolutely right that this could be the beginning of a cascade, where their neighbors say -- who have foregone the nuclear options for decades, but always had it in the back of their mind -- Egypt, Turkey, Saudi Arabia, Syria will have to reconsider their decision, so far, not to have the bomb, if Iran gets the bomb. So, possession -- it's not just use, just possession is a problem.

And then there's -- we haven't talked about something -- third, but which Gary has done a lot of good work on as well, which is diversion. The current owners of the bomb may not be the ultimate owners and users of the bomb -- they may sell the technology; they may lose control of the technology; they may divert it to a third party who uses it. You know, this is uranium-235. It has a half life of 713 million years. So, once these cats make this stuff, it's around for many turns of the wheels of history. And who knows --

ROSE: Like Council members. (Laughter.)

CARTER: -- yeah, who knows who's hands they'll come into. So, I agree with Gary, it's a -- it's a big problem. But it's not just one problem, it's a complex. Each one of those things I just named is, all by itself, something to keep you up at night.

ROSE: Well, let me ask you a question, though. Again, I keep hearing the Israel angle of this, are you saying that the -- it's Egypt, Saudi Arabia, Syria, Turkey will be more scared of an Iranian bomb than they would be of an Israeli bomb?

CARTER: Scared and jealous -

ROSE: Why would the Iranian --

CARTER: -- scared and jealous -- and jealous too.

(Cross talk.)

ROSE: So, the Iranian bomb would --

CARTER: There's the Shiite bomb, there's the Persian bomb. I mean, all of it's -- it's a pride thing. It's not --

(Cross talk.)

ROSE: So, that would make them take actions that they didn't take in response to the Israeli development of a nuclear capability?

CARTER: Yeah. That was a close-run thing with respect to Israel but, yeah, it would add another weight in the pan. They're always balancing whether to go or not to go, and Israel's in the "go" pan, and this adds another weight in the "go" pan for all of those parties. I think it's quite clear.

ROSE: Okay, let's -- there are lots of things we can get to with that, but let's go back a little bit to the question of how things have gotten to this point. If everyone has -- recognizes what -- if everyone realizes what you're saying and has tried to stop this, why have all the things that we've tried not worked?

CARTER: Well, we haven't tried very much, so --

ROSE: So, we've been sitting around watching all this without actually trying this?

CARTER: Well, I observe -- and Gary knows this much better, and let me just say something and then turn it over to him because he's been thinking about the diplomatic option, doing really good work on that, and has a lot of actual, practical experience negotiating non-proliferation things -- but, to my way of thinking, we have had this policy of tough talk and incongruously weak action for some years now.

And, you know, diplomacy is about carrots and sticks, and the carrots haven't been there because the Russians and the Chinese and the Europeans haven't wanted to wield them. The carrots haven't been there. We haven't wanted to proffer them.

Our administration, near as I can tell, has been divided between a camp that wants to call Iran the "axis of evil," and so forth, and contain or isolate on the one hand; and another camp which would like to "give it a try," to talk them out of it. And we've had the worst of both worlds, where we've gotten the disbenefits of both of those policies -- the benefits of neither. And that's what happens when you have -- you're stymied. And that's just taking them. And then the Europeans, the Russians and the Chinese all have their own issues for why they have been ineffectual.

So, I don't think the experiment's been done, really. It's not that it's been done and failed, it hasn't been tried. Gary made a real interesting point a short time ago, which is, had it been tried in 2003, there's now some evidence that it might have worked. That's the real meaning of the 'ill-starred' NIE, which was otherwise appallingly worded and misleading.

But what it suggested was that in 2003 the Iranian leadership was looking at us invading Iraq -- and a little scared about that, but we seemed to be working with them in Afghanistan, and maybe an accommodation. There seems to be some evidence that had we jumped then we might have been able to talk them out of it. That was then; now is now. They've had the experience of fecklessness, and they probably think we'll huff and puff, but never really blow the house down.

SAMORE: I want to pick up on something Ash said. I think he's right that the Bush administration has tried diplomacy in a half-hearted way, but I also want to emphasize the structural obstacles to an effective international approach, and in particular, the different interests that the big powers have, and this is something the next administration's going to have to grapple with.

For the United States, and for our allies, it's very easy to put nuclear nonproliferation as the top objective -- and that's our principal focus, in terms of both incentives and pressures, but for other countries, whether it's the Europeans, or the Russians and the Chinese, nuclear nonproliferation is the competing interest against other interests they have. And, as a consequence, it's been very hard for the U.S. and its allies to form a coalition that was prepared to take really serious measures against Iran if they -- you know, if they refused to stop their efforts to try to acquire a nuclear weapons capability.

And, in particular, the Russians and the Chinese have been a very weak link in our efforts to try to mobilize U.N. Security Council action -- again, for reasons that make sense if you look at the world from the standpoint of Moscow or Beijing. That's not going to change for the next administration. The Chinese are still going to want to protect access to oil and gas from Iran; the Russians are still going to see Iran as part of the overall effort to balance American power; and we, as we heard this morning, there are all kinds of covert business interests that the Russians -- you know, that the Russian elite is trying to protect.

And I'm afraid the Georgia situation is going to tremendously complicate any efforts for the U.S. to form and effective coalition against Iran. If Georgia doesn't get fixed -- if that, in fact, spreads to a broader conflict with the Russians over Ukraine and other parts of the near abroad, it's really going to leave us on our own -- I mean, the U.S. and its Western, you know, allies without being able to count on the Russians to do much help.

ROSE: So, let me get this straight. It's a real problem. (Laughter.) It needs to be fixed desperately. There's a way we might be able to fix it with a well-calibrated, sophisticatedly deployed package of carrots and sticks. But we're not going to give the carrots, and we're not going to use the sticks, so we're back to square one.

SAMORE: Well, I think the next administration will have a chance to deploy a more effective package of carrots and sticks. And, you know, let me just mention -- on the carrots side, because I think that's a lot easier, as Ash said, the Bush administration has been divided. The Bush administration has supported the international offer to Iran to help their civil nuclear power program if Iran agrees to accept a 10-year moratorium on its enrichment program.

I think that's a very generous offer, and makes perfect sense if the real purpose of Iran's program was nuclear power -- that would be very attractive. Of course, that's not the real purpose of their program. But what the Bush administration has not been willing to do up to now is to throw into the pot U.S. willingness to improve U.S. bilateral relations with Iran -- lifting our bilateral economic sanctions; you know, normalizing political relations; giving some kind of security assurances.

Now, you know, I think those carrots are of mixed appetite for the Iranian regime, but to not have deployed those important instruments on an issue that we all agree is critical importance, that strikes me as a weakness in our position. And I think the next administration, whoever is elected, will be in a position, I hope, to offer to Iran a fresh start, a transformation in the relationship if Iran meets our needs on the nuclear issue.

To me, that part of the formulation is much easier. The harder part is how you back that up. And, ideally, we would want to go to the other big powers and say, we're going to make a much more generous offer to Iran to solve this nuclear issue, but if the Iranians turn down that more generous offer, we're counting on you to support stronger sanctions. And what I'm worried about is this Georgian crisis may have interfered with our ability to line up the Russians and Chinese beforehand to support sanctions if the Iranians refuse a more generous offer.

ROSE: Do you agree with what he said?

CARTER: Yeah, I do. I think it's worth a shot. I wouldn't put a high probability on its success. It needs to be tried. I'd just make two additional points about the diplomatic option. The first is, I'm not an expert on Iran, and I'm humbled by what I hear about this, sort of, "amoeba" that is the Iranian government. And so when you're negotiating with something that is that divided and amorphous, even the best diplomatic setting at the table doesn't guarantee success.

And that's related to the second point, which is, I think it's going to take us a little time, if we were going to try this route -- which, again. I don't put a high probability on its success, but I think we have to try it because you can't go on to the other things unless you've tried diplomacy and shown that diplomacy has failed -- you know, we don't, our government has not interacted with the Iranian government much at all. There was somebody -- Nick Burns, a friend of Gary's and mine, our top diplomat, had the job that Frank Wisner once had -- Frank's here -- said that there was, when he came into office, "half a person" in the State Department who dealt with Iran.

And it reminds me, if I'm a Defense person -- and there's an old story about a letter written to the secretary of the Navy by the MIT Chemistry Department before World War I, and they said, it looks like the field of chemistry is going to be very important in the upcoming war, and we would like to offer the services of the chemists. And the letter back from the secretary of Navy says, you know, thank you for your interest in national defense, and we appreciate your interest, but wish to inform you that the Navy has a chemist; -- (laughter) -- and we have somebody who works on Iran. But it was half a guy. (Laughter.)

So it's going to -- even under the best of circumstances, to figure out how to approach this amoeba would take a little bit of learning and some time and some willingness to probe and interact. And we haven't had that so far.

SAMORE: Could I just add one more thing, because I don't want to leave people too depressed. I do think that the transformation in Iraq could help strengthen our diplomatic position considerably, because the more that the Iraqi government looks stable, the more that it looks like U.S. forces can extricate themselves out of harm's way, the more it will become credible in Tehran that the U.S. would be willing to use military force if diplomacy fails.

Up to now, the Iranians have counted on our predicament in Iraq as protection against a U.S. military attack, because the Iranians could retaliate by stirring up trouble in Iraq by providing arms and, you know, and encouragement to their -- you know, to their allies in Iraq. So, the more that that option is deprived, the more we can credibly threaten the use of military force.

And I'm absolutely convinced, whatever you think about the wisdom of using military force as a last resort, unless the Iranians believe that's a real, serious possibility, I just don't think diplomacy can be effective. That doesn't mean that we should be threatening them publicly, but as they sit and calculate the odds, unless they believe that that's a real danger, I think whatever we put on the table by way of carrots and inducements is not going to be effective.

ROSE: You know, you're not supposed to make threats that you're not prepared to keep, if necessary. So, Ash, you know, this is the kind of thing you do, what exactly are the military options, and if they're so good and worth doing, why not just do them?

CARTER: You know, let me make a distinction first -- and this paper walks through all this, between a military option and military ingredients to real options. I make that distinction between -- because as you see, if you read this, and I'll say why in a moment, military action by itself isn't an option in the sense that it can settle the matter.

It can contribute to resetting the diplomatic table, I suppose you might say, and resetting the registers in Tehran. But it, by itself -- for reasons I'll explain in a moment, doesn't dispose of the Iranian nuclear program. So, you have to ask yourself, after military action -- what? And that's either a return to a diplomatic path, now made more plausible by the fact that you've shown you're willing to whack them; or, or to a strategy of containment.

But there are really just two strategies for dealing with the Iranian nuclear program, which is to talk them out of it; or get used to have them having it and adjust militarily. And so, as we think about military ingredients, of options, there are two options: Stop them -- what's the military ingredient to stopping them?; and contain and deter when they get the bomb -- what are the military ingredients to that?

Let me start with the first --

ROSE: Wait, that's three options, right? There's talk them out of it; there's stop them out of it by force --

CARTER: But, what I'm going to -- about to suggest is that doesn't really work out to be very practical. I mean, so the -- what everybody has in their mind when they talk about ending the nuclear program by military force is, most of the time, is an air strike on Yongbya, and it's now -- I mean, Yongbyon, sorry -- (laughter) -- (inaudible) -- on --

(Cross talk)

CARTER: -- on Natanz. That's more than a Freudian slip, this is analogized to --

SAMORE: (Inaudible.)

CARTER: -- to the Osirak strike by Israel in 1981, and to an air strike which I'd planned in 1994 -- Gary remembers this quite well; he was alternately intrigued and horrified by what we were doing -- (laughter) -- to strike Yongbyon, in North Korea if the North Koreans did not agree to stop, which they ultimately did.

Both of those air strikes would have been more decisive, in technical terms, than would a strike on Natanz. And, if I may take a minute getting --

ROSE: Sure.

CARTER: -- to support and say why, Osirak didn't end the Iraqi nuclear program either. It slowed it down, delayed it; drove it underground and in somewhat different directions. But Saddam Hussein persisted. What ended the nuclear program was, first, Desert Storm; then a decade of sanctions and inspections; and, finally, the conquest of Iraq. That's what ended the -- Osirak did not. Osirak gave time for the work -- for history to overtake Saddam Hussein's regime. So, it wasn't -- Osirak bought the time for other things. Osirak didn't end Saddam Hussein's nuclear program.

If we had done Yongbyon in 1994 -- what we were going to do was strike an operating reactor that had those fuel rods, that now, to my total dismay, another incompetence on our part, has committed -- the North Koreans have now turned into bombs. But, those fuel rods were, at that time, in an operating reactor. And it's not a trivial matter to take out an operating reactor, because you can create a little Chernobyl, and we were quite confident that we knew that we were going to be able to do that. That would have entombed those fuel rods in the rubble of a reactor. We would have taken out the reprocessing facility, the fuel fabrication facility, the other reactors under construction, sort of, everything associated with the North Korean nuclear program. And so what would the North Koreans had to do? They had to go dig this dirty stuff out of the rubble; rebuild a reprocessing facility; rebuild the reactors and start all over again. Now, they could have done that, but it would have taken some time.

Let's look at -- let's think about Natanz for a moment, what's going on in Natanz. In Natanz there are these centrifuges spinning, 3,000 of which, operated in the right way, for a year, to make a bomb's worth -- that is 25 kilograms of highly enriched uranium. And we could get rid of it in a night. I mean, the United States -- this paper goes through how we'd do it. The Israelis a little bit lighter, but also could probably do it. So, we could destroy that facility.

And if you believe, as most people do, that there are other parts of the Iranian nuclear program that are not at Natanz -- and probably parts we don't know about, but that Natanz is the fastest route for them to a bomb, then destroying Natanz will slow down them in getting to a bomb. By how much? A good reckoning might be maybe two years, or something like that, because what -- they have clearly thought about this, and they have the ingredients of a reconstituted program hidden somewhere else. And so they'll -- they'll start again.

So, you have to think about two scenarios here: One is the scenario that the NIE plays out, in which they're really after the bomb but they're going to play "cat and mouse" with us; and they're pretending only to lightly enrich, and just a little bit, and then they're going to get up to the point where they can quickly break out and enrich, and make a bomb's worth. That's path one; that's the path we're on now -- and, what people say, maybe five years or so and they'll get there, or some number of years, it's all a guess, or an estimate. The other path is we bomb them; they rebuild. And then, of course, all bets are off. They're not going to play "cat and mouse;" they're not going to be letting inspectors in; they're not going to -- you know, they're going to race.

Those two paths only differ by a couple of years, in terms of when they get the bomb. Said differently, a single strike by itself buys you a couple of years but doesn't dispose of the matter. So, how could you dispose of the matter? Well, you only dispose of the matter if that air strike slows them down long enough for something else to happen -- which is us to carry out the diplomacy, having shown that we're willing to use force; that diplomacy succeeding in ultimately ending the program. Or, you have to go back again and again, every time you find them. And you're talking about going back every year or every two years -- if you find what they're doing.

So, that's the sense in which bombing them now is not an option, in the sense that it ends the story. It begins a new chapter in the story, and you still have in front of you, fundamentally, two options, which is: talk them out of it, and get over it. You've changed the terms of talking them out of it, perhaps, by showing your willingness to bomb -- you've bought some extra time for diplomacy to work, but you're still fundamentally pursuing a diplomatic path.

Unless you go to option three, which is to invade the place. And let me just quickly say here that, you've got to remember, this place has, you know -- what, four times the number of people, and three times the land area of Iraq. And, we've just had the experience of conquering and governing big places in the Middle East, and there doesn't seem to be a huge appetite for that On top of which, even though we've had plans for the invasion of Iran as long as I've been associated with Defense, we don't have the ground forces now to do it.

ROSE: What makes you think that the response to an American, or an Israeli air strike would be limited to rebuilding the program, or coming --

CARTER: Oh, it wouldn't. It wouldn't. I've given you the pro, which is that you get a -- buy yourself a couple years. The cons are, (laughs) I think, quite large. They'll retaliate -- no kidding, they'll take action through proxies, and so forth. They'll try to disrupt Gulf shipping -- I don't think they'll succeed in doing that for long but, at any rate, they'll retaliate. That's number one.

Number two, there's every chance that using military action under the -- in the wrong way will not reset the diplomatic table, it will turn over the diplomatic table. That is, it will be a one-way exit from diplomacy, because the Russians, the Chinese and the Europeans are going to say, well, to hell with you, we're not -- you know, we're not on this train anymore. And we can't do a lot without them, just because we don't have the sticks without them.

And the third thing it would do is turn a generation of Iranians against the United States. And that's unfortunate because, as near as I can tell -- I'm willing to be corrected, the Iranian people are not anti-American, certainly not by the standards of much of the rest of the world with the current historical -- (laughter) -- and this is according to polling data, and so, and so forth. And, you know, you piss them off for a generation -- the way they did us when they took our hostages.

And so you're buying yourself, again, kind of a one-way street from diplomacy, and a one-way street from any hope of reconciliation with the Iranians as a people by taking this action. So, I, myself judge the pro is buying a couple of years, but it's even dodgy at that. That's not real appealing, in terms of a benefit. And the disbenefits are quite large. So I think the balance weighs against military action at this time in a sort of diplomatic vacuum. And I think that's the judgment that our government has made.

ROSE: Okay, so the military sticks aren't really there. The diplomatic and economic sticks are in the hands of other major powers that aren't interested in using them, and therefore they aren't really there. And the diplomatic, economic and other kinds of carrots are not going to be deployed by any U.S. administration that you know of, or at least it hasn't been.

So why do you guys -- to go back to what you were saying before, why do you think there is some real hope that a newfangled carrot-and-stick initiative might work? As George Kennan used to say -- (speaks phrase in foreign language) -- "Why is this time going to be different than all the previous times?" (Laughter.)

SAMORE: Well, look, I think it probably won't be. But I think the next administration has to make that effort before Iran reaches the point where they have a credible breakout capability. And the good news, again, just to not leave you all too depressed, is that even though Iran has been trying over the last two and a half years to move ahead as quickly as they can in their enrichment program, they're encountering enough technical difficulties.

We've made it harder, through export controls and sabotage and other, you know, actions so that we've complicated their program. It's still a very rudimentary capability. They've got 4,000 centrifuge machines that are spinning very inefficiently. They're producing about one to two kilograms of low-enriched uranium a day, which is very, very marginal capacity.

And, you know, I think we do have at least a couple of years before they reach the point that they would feel confident they could break out in a short enough period of time, as to say produce enough highly enriched uranium for a couple of bombs in a short enough period where we would not have the opportunity to attack them, because where I think -- I mean, Ash is absolutely right about the pros and cons of a military strike that is, you know, what I would call a preventive strike, a strike against a facility which is under IAEA safeguards, which is producing low-enriched uranium, which is ostensibly a peaceful facility. There are a lot of negatives.

However, think about a scenario. There are two other scenarios where military force might be used. One is a breakout scenario. Let's say that the -- which is sort of like the North Korean scenario we were looking at. Let's say Iran kicks the IAEA inspectors out of their enrichment facility. That's a pretty good indication that they're now trying to break out; they're now trying to convert that facility from the production of low-enriched uranium to the production of weapons-grade uranium.

And in the period of time it will take for them to produce a couple of bombs' worth -- which could mean, depending upon the size of this facility, could be a couple of months -- I think a military strike against that facility in that window is much easier to justify, you know, internationally and domestically.

The second scenario, which we've seen very recently, is the Syrian scenario, where the Israelis bombed a secret nuclear facility. And again, the international reaction to that was marginal, and it didn't in any way interfere with subsequent peace talks between Israel and Syria. So if we were to identify a secret facility, you know, in Iran, or if we or the Israelis or someone took military force against that, again, I think that's much easier to argue in favor of.

So, you know, to me the military options -- we shouldn't just look at the most difficult case, which is a preventive strike against an ostensibly peaceful facility. We also want the Iranians to believe that if they actually try to make nuclear weapons, or if they build secret facilities that we detect, they run the risk of being attacked.

CARTER: I agree with that, but I just need to say something about that so you don't misinterpret. Everything that Gary says is absolutely right. There are circumstances -- I don't mean to say military action is not advisable under all circumstances. I'm saying there's no military option that settles the matter, including the two that he just adduced.

You're still back to the issue of what do you do about the Iranians if they want to get the bomb, and you either keep bombing them or you keep talking to them. And you may have reset the terms by taking military action, but you're not out of that dilemma entirely. That's my only point about saying it's not an option. I think it's an appropriate part of a coercive diplomatic strategy.

Point two is military action -- I think Gary would readily agree to this -- in a diplomatic vacuum -- that is, without a strategy and without an idea of where it leads -- is the worst of all possible worlds, because it doesn't achieve much and you get all the blow-back.

So if we're going to do this, we have to set the terms so that it is in a diplomatic context and it's clearly the consequence of the Iranians' failure to accept reasonable diplomacy. Then it might be advantageous to not only threaten to do it but to do it. But in the current circumstances, where that context isn't there, you get the small technical advantage and all of the disadvantages.

ROSE: Could the Israelis do it if we didn't want them to?

SAMORE: I would say yes.

ROSE: Even if we refused to give them the codes?

CARTER: Well, they don't have to fly over air space that we control. They can fly over Turkey. They can fly over Saudi Arabia. There's even some reports that they might have had some discussions with the Georgians, to use Georgian airfields.

There are four routes, at least, for Israel. Israel -- it's not as good as if we do it because the scale available to them is not as great. I think they can do it. I think they can do it without the complicity in advance of anyone, including ourselves. By "do it," I mean do the Natanz. They can't do anything as extensive as we could do.

It's gone through in this paper how they do the refueling and so forth. And for them, the regrets are less, because they don't have to worry about turning the Iranian population against them. The Iranian population is already against them. They don't have to worry about upsetting a delicate multilateral diplomacy that they're involved in, because they're not.

ROSE: Isn't that precisely the point, which is, isn't there a moral hazard issue here, which is if the Israelis have less incentive to worry about the consequences and perhaps more incentive to favor a short-term setback, aren't there things --

CARTER: They're more likely to do it than we are. I've said that between our elections and the inauguration of our president, I'd put 50-50 the Israelis to do that.

ROSE: And if the U.S. government decided that it was not a worthwhile thing to do, there is nothing it could do to prevent the Israelis from doing it? Is that what you're telling me?

SAMORE: No, I don't think that's what Ash is saying. We can certainly try to discourage the Israelis. And, in fact, there's some evidence that this administration has been doing just that; that in June and July, when, you know, there were reports of Israeli practice runs over the Mediterranean and when there were public statements being made that were very belligerent, as I understand it, the U.S. government has tried very hard to argue with the Israelis that this is not the right time, not to say never, but that right now would not be an appropriate time to launch an attack.

And I think one of the difficulties we have in our diplomatic strategy is that, on one hand -- and I think you mentioned this, Gideon -- we want the Iranians to believe that the military force is a real option, but we also have to be very aware, as Ash has pointed out, of all the limitations and the risks that we run.

So how you use that instrument as a political instrument without, you know, inadvertently making it more likely that it's used when we don't actually want it to be used is a tricky balance.

ROSE: So the Israelis are our madman theory.

SAMORE: Well, yeah, I mean, in theory, you'd like to do that. But I think --

ROSE: Don't ask us, because who knows what the Israelis might do.

SAMORE: We will certainly make that argument, and I think it's a credible argument, for all the reasons that Ash has pointed out. The Israelis are much more sensitive to the risk of Iran having a nuclear capability and genuinely see that as an existential threat, which it isn't to the United States. And the Israelis are much less sensitive to the possible consequences and blow-back.

So it's a good diplomatic instrument. But we have to be careful when we use that instrument that the Israelis don't see that as a green light to go ahead and strike, you know, before we're ready to have that actually happen.

CARTER: There's another layer of this too. It's absolutely right. And the green light is not only to the Israelis, but if we are seen to have given a green light, then we get all the negative consequences as though we had done it ourselves. And so if everybody's going to think we did it, we might as well just do it, because we'll do a better job. But there isn't a soul east of Morocco who won't think we didn't have something to do with it if the Israelis do it. That's the dilemma for us.

ROSE: I used to think that we were the great (power patron ?) in this relationship, but I guess not. (Laughter.)

Okay, let's turn it over to you guys. Herb Levin.

QUESTIONER: Last night, after McCain finished, I had a lot of reading to do, so I left it on. And I got all of these people talking up there at the convention who I had never heard of before, will never hear of again, and they were all reading things that had been supplied to them, obviously, by the brain trust of the Republican Party.

And there was a theme, and the theme was that McCain would never compromise with evil. He would never sit down with evildoers. He would never compromise. And we must absolutely elect him and stand firm, because these other guys, they believe you can work things out with people who are fundamentally evil. And we're going to have 40 votes in the Senate. We can block anything serious, and that's really what we must work for.

So I thought that those who do not believe in negotiations in the past eight years have been a little bit restrained when the president wanted to negotiate, but they will have no restraints, should there be a Democratic administration. And this was well-coordinated. You guys all had gone to bed. But you certainly shouldn't talk to the Iranians, for many reasons. And there are even people who wanted to push over Burma, who wanted to talk to the Cubans. The North Korea negotiations had been a disaster. And, of course, people wanted to sell out Taiwan to the Chinese.

And I thought, where do you get support? You've talked about the failures, potential failures, pitfalls, of violence. Where are you going to get support for a serious diplomatic strategy? And when you have the Democrats apparently willing to support Bush's initiative to have the Indians build more nuclear weapons and test them with our blessing, under that argument, where is support for the kind of strategy that you're talking about, and what is the strategy?

ROSE: Try to keep your answers shorter than the question. (Laughter.)

SAMORE: Well, you know, I think what candidates say during the election is not necessarily a good guide to what they'll do once they're in office. I know this is a shock to you. And I -- you know, I mean, I always believe that at the end of the day, the U.S. government tries to do the most sensible thing.

So I think there's a pretty good chance that whoever is elected will try something like the kind of diplomatic strategy we've talked about, which frankly is building on the current strategy. I mean, if you ask the Bush administration what's their diplomatic strategy, it's carrots and sticks. It's the use of inducements, threats, intimidation, persuasion; I mean, all the instruments that we normally use in diplomacy. It's just that they haven't done it very efficiently.

And the obvious approach, since we're nearing a point where it would be too late for diplomatic action to be effective in stopping Iran's program, the obvious approach is to try to enhance that package with better carrots and more threatening sticks.

So I actually think that an Obama administration and a McCain administration is likely to pursue a very similar strategy, which will seek to build on the current approach and try to fine-tune it in a way that makes it more effective. As we've all said, it may very well not work, and then the next president will face a very difficult choice between either accepting that Iran will have a breakout capability and hoping to erect barriers to prevent them from actually making nuclear weapons, or taking military action with all the risks and -- (inaudible) -- we've talked about.

CARTER: Can I just say something about that? I hope you're right. John McCain, at least judging from what he said about Iran, but also about North Korea, really does believe that talking with evil is -- and I respect that point of view; I have a different point of view, which is I have the same feeling about North Korea, which is I think it's more evil to let them get nuclear weapons than to try to deal with them.

I wish that North Korea had a different government. Its people deserve a better one. I wish Iran had a different government. But I don't know how to change it. And it looks to me like they're going to have that government long enough to get the bomb. And so talking about changing the regime really doesn't answer the question, which is, "What are you going to do about nuclear weapons?"

So I hear this, "I don't like to talk to evil people," and so forth, and I certainly respect that point of view. But my answer to that is, what's the second sentence in that paragraph? What are you going to do about the bomb? Is what you're saying you're just going to let them get it? That's really what I infer from a statement like that is that we will let Iran get the bomb and then we'll figure out what we do after that.

That, to me, is too dangerous a path. And I'm willing to try something else, even dealing with people whom I wish weren't governing the country they are in order to head that off. I just don't think that that's an analytically sound -- it's a stance, but it's not a policy.

ROSE: We've got a pair of questions. We'll get as many as possible. Please keep them succinct. Over here -- Alan Gerson and Frank Wisner.

QUESTIONER: Alan Gerson.

Ashton, you said that the odds of an Israeli strike before January are about 50-50. And you also said that even if Israel were to strike, if I understood you correctly, without U.S. authorization or an amber light, it would be perceived, certainly by the Iranians and the rest of the world, that the United States did provide such authorization.

Given that, would you venture another calculation as to what the odds are that the United States would feel compelled to come in and finish the job if the Israelis began it?

ROSE: And Frank.

QUESTIONER: I wanted to tell both of you how much I've appreciated what you've said today and the analysis you've brought, the arguments you've advanced for a case of engagement, which I'd like to think is the only rational way forward.

At the same time, I'd like to add a thought that flows from your arguments, and that is, treating the nuclear issue as separate from the overall question of our strategy towards Iran will undermine our capability to deal with the nuclear issue.

But once we do turn to the nuclear issue, I would argue, as part of the whole, have you all looked at, thought about the consequences of the arguments advanced by Bill Luers, Tom Pickering and Dr. Walsh regarding a deal that would end up with Iranian enrichment capability inside Iran but under international supervision and international and Iranian mixed ownership? Does that have a space in your logic as a way through this otherwise extremely difficult puzzle?

ROSE: Either one of you?

SAMORE:

CARTER: Well, I mean, you asked a good question, and I suggested that myself. If you thought the Israelis were going to do it and you were going to suffer -- we were going to suffer most of the blow-back anyway, we would do a more competent job carrying it out ourselves. So there's a certain logic to that.

Your question was, do I see that logic prevailing? No. I don't look -- and this is tea-leaf reading, so I don't know; I'm not in the administration. But I see the administration having done the analysis I did, which suggests that this doesn't get you a whole lot under the current circumstances. And if you're going to do it, you want to do it in the right circumstances, number one.

And number two, I see the lineup of the personalities of the administration. I mean, it was different when Don Rumsfeld was there and Dick Cheney and they had a kind of tag-team relationship. Bob Gates, Mike Mullen, the chairman -- I mean, if you listen to what they've been saying, they've been more or less saying, "We've got our hands full and would rather not get into this kind of thing." Condi Rice is trying to end her term on a negotiating note instead of a bombing note. That seems quite clear.

So I don't see -- you know, the decider can still decide to do whatever he wants, but there is around him a group of people whom I think will be suggesting that this is a good idea. So both for the reasons that it doesn't seem analytically to make a lot of sense and because of the current constellation of personalities and where they seem to be at, I don't see the United States -- (inaudible). So I would not -- I tell people I see the odds of us doing it before the end of the Bush term as very small. I put the odds of the Israelis doing it between the election and the inauguration considerably higher.

SAMORE: Well, I think Ambassador Wisner is absolutely right that we can't address the nuclear issue in isolation. We have to figure out a way to address it in the context of all the other issues that we have on the table with Iran. Now, unfortunately, that means both issues where we might have common interests, but also a lot of interests where we have different interests, including support for Hezbollah and Hamas and support for the peace process and regional security arrangements and other issues. So even though that complicates the situation, I think it's important that when we approach Iran, it has to be in the context of trying to deal with the overall relationship.

On the second question, Ambassador Wisner asked about the idea of an international enrichment facility located on Iranian soil. Well, that's what the Iranians are proposing, although they haven't been very precise about exactly what that would look like in terms of international ownership and participation.

From my standpoint, that's a pretty undesirable outcome, because I think it gives Iran what they want. I think it gives them a base of capacity to produce nuclear weapons, and they could use that kind of international facility in two ways. First of all, they could nationalize it and actually produce weapons-grade uranium at that facility, and we would have helped them or we would have participated in the construction and operation of that facility. So I think we would look pretty foolish in that case. And, of course, there's a history in Iran of nationalizing industry, so this is not unprecedented.

But secondly, I think much more likely, if they had a huge facility on their soil, that would mean training a lot of people. That would mean producing a lot of components and materials to run that facility. And I think that creates many more opportunities for them to build a covert facility and break out in a way where there wouldn't be any warning.

Now, the argument in favor of an international facility is that we would have people or there would be people from western countries on the ground in that facility, and therefore we would be in a better position to keep tabs.

I think that's true, but to me that advantage is outweighed by the opportunities it creates for Iran to cheat. And I think we have to recognize, in a realistic way, that any agreement where you're talking about obstacles to diplomacy, and just as with the North Koreans, you have to assume that any deal we make with the Iranians, there's a pretty high risk that they will cheat on it. And certainly their record of cheating on the NPT can't give us much confidence that they would actually abide by any agreement. So we have to keep in mind the importance of verification.

So to me, the sort of international, you know, multilateral facility in Iran, I think you could probably negotiate that since that's what the Iranians are proposing. But I don't think that's a diplomatic outcome that would give us much happiness.

ROSE: Gary Sick back here, and over here.

QUESTIONER: (Off mike) -- Israel can bomb Iran, and the United States will not be held responsible for it and that the retaliation against us, we can just sit there on our hands and do nothing. If it's 50-50 that they attack, it's 50-50 that we go to war. And I don't believe it, frankly. But my question is, Gary has been very careful of always saying a nuclear capability, and Ash has just said bomb.

Is this a distinction without a difference? I mean, having a nuclear capability is different than having a bomb? What is the difference, and what is actually --

SAMORE: Yeah, yeah --

ROSE: We're pairing them. We're pairing them.

SAMORE: I'm sorry.

ROSE: Over here.

QUESTIONER: (Off mike.)

ROSE: Hold on a second. Wait for the microphone, please.

QUESTIONER: I guess what I'd like some clarification on is the question of Israel and the role Israel could play in a military strike on Iran. The way that I've understood you guys talking is that the only deterrent to Israel bombing is the U.S. pressure for it not to.

And what I'm wondering is, is there any other deterrent in terms of, you know, the possibility of blow-back from Hezbollah, Syria, Hamas, the various complements of what Israel is going through right now? Is that a deterrent at all? Does that play a role? Is it a question of America holding back Israel at some point either letting it go or Israel becoming sort of the tail that wags the dog in this situation? If you could sort of explain that, I think it would help in understanding the 50-50 situation that you brought up.

SAMORE: Well, let me start. You know, perhaps I should -- you know, I made this distinction more clear earlier. You know, I think there's a big difference between a capability and the bomb. And what the Iranians claim they're seeking is a capability. Of course, they say that program is purely peaceful, intended to produce low-enriched uranium for nuclear power reactor fuel.

But privately, I've had Iranian officials say that they live in a dangerous neighborhood; they're surrounded by countries with nuclear weapons, including India, Pakistan, Israel, Russia, and the U.S. is there, and they need to have an option. They need to have -- for their own survival and security, they need to have the ability in extremis to build nuclear weapons. And that means they need to be able to produce fissile material, either enriched uranium or separated plutonium. And if they build a large -- you know, if they build a large enrichment facility, that will inherently give them the option of converting and using that facility for the production of weapons-grade uranium.

Now, they say they would never actually build nuclear weapons, because they know that would scare the neighbors and it could risk war, you know, and it could cause a nuclear arms race in the region. So sort of the Iranian position is, "We'll be content with a latent capability, with a breakout option, but we'll never actually use it." I don't believe that. I mean, I think once the option is available, at some point the temptation to actually have real nuclear weapons on missiles will be so overwhelming that it can't be resisted.

And we've seen other countries that have made similar arguments. I mean, India, for example, for many years argued, "We don't want nuclear weapons, but for our status and our sort of protection in extremis, we need to have the option to build nuclear weapons." But eventually the desire or need, perceived need, to have the actual bomb became overwhelming. And I think in the case of Iran, my guess is a similar process would take place.

CARTER: I agree with that. He just uses -- he explains things better than I do. (Laughs.) It's the only thing I'd say about it.

Your point is a -- I mean, it's not just that they would be putting their best ally in a really tough spot, as Gary says, that deters the Israelis. I mean, they can do the math as well. They know that this doesn't end the story. They know that there would be retaliation against them. So again, taking out Natanz isn't the end of the story for anybody. And the Israelis know that that's true for them, as well as for us.

So I think there are many things that go into their calculus, but presumably one of them is, if we're right that our government has been suggesting that this would be an unwelcome development for the United States because it would immediately embroil us in something we didn't instigate, hadn't thought through and hadn't positioned ourselves to withstand, that's an unfriendly situation to be in. But I think there are other things as well that go into that calculus. But the balance is not as sharp as it is for us, which is why I'm wondering whether they won't, in fact, decide that the balance is in favor.

ROSE: I really find you guys astonishingly cavalier about this, I mean, given the extraordinary leverage, potential leverage we have vis-a-vis Israel. Any U.S. administration that decided it was not prudent to strike Iran and allowed Israel to do so anyway would be guilty, in my opinion, of a gross malfeasance in the advancement and securement of the American national interest. I cannot imagine that taking place if we truly used the leverage in advance to make that clear. It's not something that would be an unfriendly act. It would be getting into a war that we had chosen not to start. But that's just my take.

I'm curious here -- we have several who want to get into this. Over here, and then back there.

CARTER: You can't let that stand. Cavalier, Gary was not. Gary made the point earlier that it may be a dangerous game, but the game in which the Iranians wonder whether the Israelis are going to do something has some value. So you've got two audiences out there. You've got the Iranians, whom you might wish to think this might happen, and the Israelis, whom you might wish to think this would not be such a good idea. And that's a sporty game to play, but it's not an unreasonable game to play. So I --

ROSE: But that's using Israel as a threat. I thought you said -- you said you thought there was a 50-50 chance that there would be an Israeli strike.

CARTER: Yeah.

SAMORE: You know, I think that we may not have an opportunity to use our full leverage to dissuade Israel. If we decide that we think an Israeli attack is not in the American interest, I think it will happen in a way so that we will not have the kind of advance warning that would allow us to take effective action.

So you lay the cards out now. "Here's what will happen if you do this when we say, 'Don't do it.'" But, you know, as I say, I don't think the U.S. government wants to act in a way that precludes the threat, because we're using the threat as a political instrument.

CARTER: And that's what I'm afraid gets misplayed.

ROSE: You're going to get a chance next session, so over here and then back there.

QUESTIONER: (Name inaudible) -- Council on Foreign Relations.

Being an Iranian myself, and having spoken to countless Iranian diplomats and former Iranian candidates for presidency and Iranian dissidents here, there is a current denominator, common denominator, for the argument of carrots and sticks, and that is that the Iranians want America to recognize Iran.

There is an element of recognition that's very, very important to the Iranian people, whether they're here, whether they're in Iran. And I wanted both panelists to please shed some light on this. To what extent do we see this happening? Is this a viable carrot, and do you see this as a lever to change this game in our favor? Thank you.

ROSE: And then back here.

QUESTIONER: Jim Dingman, INN World Report.

One could argue that in the spring to the end of 2003, the Iranian Revolutionary Guard Corps and the political assets that had been built up for 15, 16 years were deployed to Iraq to aid and abet those who were coming up and upsurging in the crazy environment of that time.

I want you to specifically talk about what you think would happen in Iraq and Afghanistan if, whether the Israelis did this unilaterally or we did it unilaterally, we attacked their nuclear facilities. What would happen on the ground in both those situations, in your minds?

SAMORE: Well, let me first comment on the psychological element of engagement. I do think it's important for the Iranian public to feel a sense of respect and recognition from the United States. And I think that's a relatively easy, you know, price for the U.S. to pay, although sometimes I wonder, when the Iranians talk about recognition of their importance and respect, I often wonder how they translate that into real terms.

I mean, sometimes when the Iranians talk about, you know, recognition of their status as a leading power in the region, that means that the U.S. can't have any military bases in the Persian Gulf, which is a nonstarter. So I think it's important that -- you know, it's very easy I think to convey respect but sometimes that is used by the Iranians as a subtle way of getting at much more important issues, and that's something that you can only tease out in the course of diplomacy, which is why it's important to talk to them and find out what it means.

You know, in the case of Iraq and Afghanistan, what would the consequence be, I think it's very difficult to anticipate, but what I was trying to say earlier is that the situation we face in Iraq now appears to be more impervious to Iranian retaliation and the consequences in the street in terms of a threat to the Iraqi government. I mean, presumably, the Iraqi government would disown any support for a U.S. or Israeli military attack because it would obviously -- at least with much of the Iraqi population it wouldn't be popular. With some of the Iraqi population, the Sunnis much actually be quite happy, quietly.

You know, so I think that we're at, you know, I guess the general thing I would say is the better things look in Iraq and Afghanistan in terms of U.S. forces not being in harm's way, and the more stable those governments look, the less opportunities and options the Iranians would have to retaliate. They'll clearly try to retaliate through proxies and allies in both places, but part of the balance of power is the extent to which we appear to be in a position, you know, to, you know, to withstand whatever retaliation they can take in response to an attack.

CARTER: Can I just say something?

SAMORE: Sure.

CARTER: First, I thought that was absolutely a good answer to the second question, there will be consequences in Iraq and Afghanistan, I should have mentioned that earlier. But you raised something that's very, very important and Frank Wisner does as well which is whether there's a possibility of a diplomatic breakthrough that is more comprehensive than one just dealing with the nuclear question. You could say it differently which is can you even hope to have an agreement with Iran that is isolated to the nuclear, or would it have to be some broader kind of accommodation?

You know, we're used to arms control with the Soviet Union, and the premise of arms control in the Soviet Union was we're going to talk about weapons and everything else is going to stay the same. You know, we're still a cold war, we're still antagonists but we're going to deal with this little problem together. And that worked. That was more or less the way it was done with North Korea under the agreed framework. We hate you, you hate us, we're not going to trade with you, we're not going to relax any other kind of pressure on you, keep you on the terrorist list that trade with the enemy, this was back in 1994, but we're going to make this little deal about nuclear -- this one little issue about nuclear weapons. That's type A of agreements.

Type B is where there's a general relaxation of pressure by the West against Iran in return for a comprehensive change in conduct on behalf, that's a bigger deal. Frank's raising that prospect, can you have the former in this case without the latter, or can you imagine a circumstance where the cold war essentially with us and Iran continues but we make a deal about this little thing called the nuclear program. I don't know whether the little one is possible without the big one, and if it's not possible without the big one and you can hardly imagine the circumstances in which the big one gets done, then that turns you into a pessimist about diplomacy.

ROSE: Okay. We're going to have one final batch of three. Over here, over there and back there.

QSince Iran is aware of the Israelis' threat too, the hour after Israel bombs Iran, then who bombs Israel on behalf of Iran, and where does Condi Rice first go? (Laughter.)

QGiven the persistency of the level of threats by the Iranians, are the Israeli's correct in your judgment, that this is an existential threat to them?

ROSE: And back there.

QJust going back to the question of making a bigger deal than the nuclear issue, is there a medium alternative or middle alternative to all this situation, the possibility of making a deal on the nuclear issue because nuclear issue is so important, and then putting on the table important concessions on the part of the United States, including -- and I want to be concrete -- full diplomatic relationships, the possibility of lifting sanctions while leaving some other issues that the United States and Iran have difficulties with on the table?

ROSE: Those three plus any final comments you might have. And one little addition which is if it is an existential threat, is it different from the one that the United States lived through for half a century during the cold war?

SAMORE: Right. Do you want me to --

CARTER: Sure, go ahead.

SAMORE: Well let me say first of all I think, you know, I completely agree that in pursuit of a nuclear deal, we should be prepared to put on the table the offer of improving, you know, our bilateral relations which would include lifting economic sanctions, normalizing political relations and so forth. Now the argument against that which the Bush administration has used is that once you play those chips, that weakens your hand to deal with all the other problems we have, whether it's support for Hezbollah or opposition to the peace process or you know whatever and I think that's true, it's a valid argument.

But for me the nuclear issue is so important, that I'd be willing to play those chips or at least see whether that would work. Maybe it won't, but I think you've got to make a decision how you use the cards in your hand, and I'd be prepared to use them.

You know, on the existential threat, I'm very sympathetic with Israel's belief that it's an existential threat. And, you know when you talk to Israeli strategists, I think it's very unlikely that Iran is going to wake up one morning and decide to destroy Israel by using nuclear weapons because the Iranians understand that Israel can retaliate in a way that would destroy Iran. But they believe that there's a small possibility, whether it's escalation, accidental use, miscalculation, diversion, plus the fact that Iran would act much more aggressively if it had nuclear weapons, but that isn't -- poses an existential threat to Israel. And given Israel's history, I think there's a tremendous sensitivity to the possibility that the entire population could be destroyed.

So I completely understand why Israel views it that way. It's not I think quite the same as the U.S. and the Soviet Union, you know, and therefore I think it's, you know, completely understandable why they would be much more willing than other countries to use military force in order to try to prevent that threat.

And, you know, I've also heard Israelis say that, you know, they wouldn't be so worried about, you know, Iran having nuclear weapons if there was a different government, so it -- I mean, a different government in Iran. So it's not the mere fact of Iran having nuclear weapons, it's the fact that it's seen as such a hostile government.

Was there one more question? Oh, yes, about -- you know, the Israeli calculation is that Iran's ability to retaliate against Israel will be limited, both by choice and by necessity, that Iran is not likely to, you know, shoot missiles at Israel because Israel can retaliate and the retaliation's likely to take the form of action through proxy. And the Israelis think they're prepared to withstand that and deal with it.

ROSE: And any final thoughts?

CARTER: Well, I said it at the beginning, it's not just use, its use, possession and diversion. We didn't worry about diversion from the Soviet Union, we have about Russia, I ran the Nunn-Lugar appropriation -- (inaudible) -- and you heard a lot about it after the fall but -- and it followed a state you didn't worry about use control.

And Russia -- and as far as leading to further proliferation, you know, Russia became our partner in stopping further proliferation. So this is, you know, different and more dangerous and I take it very seriously. You know, you can't say you can't live with something that you may have to live with and I have in this paper what we all have to do if Iran gets the bomb, but it's really a very unfortunate circumstance.

We already have that with North Korea, we've seen that in the last seven years, we're going to look back and very deeply regret that, just as we look back now -- I don't know how you feel, but I'd do anything to be able to turn back the clock and stop Pakistan from having a bomb because under the current circumstances, that is a huge worry.

What's down the road for Iran? As I said, it's the half life 713 million years for plutonium, 24,400 years? I mean, you know, the supreme leader ain't going to be around that long. (Laughter.) It'll be somebody else who has this. And so you're creating -- you're casting a shadow over humanity for a very long time every time a bomb is introduced to the world. And it's not that, you know, we're better people than the Iranian people are in some fundamental sense. But every time you put one of these things out there, you're creating a lasting danger.

ROSE: Well, on that cheerful note, we will -- (laughter) -- kick the can to the next session to how to actually resolve it all and we'll see you back here in 15 minutes.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

GIDEON ROSE: Ladies and gentlemen, and children of all ages -- ladies and gentlemen, we are gathered here today to discuss the Iranian nuclear program and what to do about it. We are very fortunate to have with us two of the best experts around on what is going on, and what should be done about it -- Gary Samore and Ash Carter.

Their extensive, distinguished resumes and biographies are in your program, so I'm not going to take up too much time here reciting them. I will mention that Ash has a new paper out from the Center for a New American Security on "Military Elements in a Strategy to Deal with Iran's Nuclear Program." And those, and other publications of both of them can be found on-line at their various websites, and available outside the door as well for not of any fee.

Frankly, I'm exactly looking forward to this session greatly. I come from a, you know, small town nestled in the potato fields of eastern Long Island -- (laughter) -- and I have a little puzzled, but I'm curious that you've -- about helping, you know, having you elite, sophisticated types eating croissant at the Council on Foreign Relations, to help me -- (laughter) -- think through certain types of things.

I've been -- I've been watching the Conventions carefully, and I've gotten the sense that this Iranian nuclear thing is a problem. (Laughter.) But, I'm a little unsure what exactly the problem is, and which of these two alternatives -- simple, easy solutions to it, is the right one. Some people seem to think the problem is they're afraid of us, and so we can basically, calmly sweet talk them out of it. And other people seem to think the problem is they're not afraid of us, and so we can basically bully or bash them out of it.

Now, I heard very good cases for why each of these makes sense -- and you guys know all this stuff, so I'm curious to hear your take on -- we all know the existing policy is terrible, but which of the two simplistic alternatives that have been put on offer for us is the right one?

And with that, I'll throw it open -- let's start with Gary, and see if you can tell us why the diplomatic -- what's going on, in your opinion, and why the sweet-talking approach is the right one.

GARY SAMORE: Well, I think the sweet-talking approach is the right one if it'll work. But my view is that unless it's backed up with a very strong bashing alternative, it probably won't be successful. So, if I was going to answer your question -- which of the two, I'd say both. And the problem we've had is combining both.

When we were in a very strong position, right after we invaded Iraq, and Iran was very nervous -- so nervous that they were prepared to suspend some key elements of their nuclear program, we didn't take advantage of that opportunity to try and negotiate with them on terms that would have met our needs in the nuclear area.

Since then, as the situation in Iraq has deteriorated, as oil prices have increased, as there have been changes in domestic politics in Iran, the balance of power has shifted against us. And now it's the Iranians that are not particularly interested in a deal that would limit their nuclear program.

So, the challenge for the next administration, I think, is going to be to both engage Iran -- in terms that makes it difficult for them to say no, but at the same time increase the credibility of our ability to punish and threaten them if they do say no. And I think that's going to be very difficult to do.

ROSE: What's the basic problem in the first place, though?

SAMORE: I think the basic problem is they want a nuclear weapons capability and we want to stop them. And both sides have -- (laughter) -- perfectly -- and both sides have perfectly understandable reasons for those objectives.

From Iran's standpoint, there are a lot of advantages in have a nuclear weapons capability, both for defensive purposes -- because they may very well fear that they'd be vulnerable to external pressure or even U.S. attack if they don't have nuclear weapons, or a capability; but also because of their imperial interests in establishing themselves as the dominant power in the region. They think nuclear weapons, or the option to have nuclear weapons, is a very important instrument of power. And, finally, just in terms of mobilizing domestic support -- as we, as we heard in the first panel, it's a very important nationalistic symbol.

So, for all those reasons, I think the current leadership in Iran is deeply committed to acquiring a nuclear weapons option -- a capability. And this is a program that they've been pursuing for 20 years, so I doubt we're going to be able to talk them out of it in the sense that we can persuade them that it's a bad idea. But what we can do is create a package of incentives and disincentives that convince them to at least delay, or slow down or limit the program. And that, I think, is probably the best that diplomacy can achieve.

ROSE: You're confusing me a little bit, because I thought the problem was that they were a bunch of crazy religious fanatics who wanted to destroy and wipe out Israel. Isn't that the issue? You sound like -- you make it sound like it's a regular problem in nuclear proliferation, of the kind that we've been grappling with for, you know, generations now, rather than some entirely new existential threat that can't be handled with conventional measures.

SAMORE: Well, I think it -- I think they are acting rationally. And I think you can even argue that the current nuclear ambition is actually something that began during the Shah's period, when we had an ally, you know, ruling -- you know, ruling the government. So, in that sense, I think it does reflect a national interest primarily.

There is a concern that since this is a government we don't completely understand -- we don't understand the extent to which, you know, these sorts of religious extremism play in their decision-making that could lead them to act differently if they had nuclear weapons. I doubt that it would. I actually think they probably would behave like most nuclear powers behave.

But that's not necessarily something to be sanguine about. If you think about the Cold War, the Cuban Missile Crisis, we almost got into a nuclear exchange with the Soviets, and we're both rational powers. So, my concern is that in the Middle East, if you introduce nuclear weapons, not only Iran, and, of course in Israel -- and other countries are very likely to try to follow suit -- that kind of a situation is very unstable and could lead to nuclear use even though everybody understands deterrence and containment and so forth.

ROSE: Very interesting. Ash, you seem -- do you do nuance too? Is this what -- (inaudible) --

(Cross talk, laughter.)

ASHTON B. CARTER: Not as well as Gary does, but -- and everything he said is true, you know, you really have to let me count the ways that an Iranian bomb is a disaster. Number one, is that they might use it against us and against Israel. You already mentioned that.

But, it doesn't end there. I think possession -- even if they never use it, just simple possession is a disaster all by itself. I think it will change their behavior. I think it's a -- it is a shield behind which they will be emboldened to do things contrary to our interests, and to the stability of the region that they wouldn't dare if they didn't have the bomb.

I think Gary's absolutely right that this could be the beginning of a cascade, where their neighbors say -- who have foregone the nuclear options for decades, but always had it in the back of their mind -- Egypt, Turkey, Saudi Arabia, Syria will have to reconsider their decision, so far, not to have the bomb, if Iran gets the bomb. So, possession -- it's not just use, just possession is a problem.

And then there's -- we haven't talked about something -- third, but which Gary has done a lot of good work on as well, which is diversion. The current owners of the bomb may not be the ultimate owners and users of the bomb -- they may sell the technology; they may lose control of the technology; they may divert it to a third party who uses it. You know, this is uranium-235. It has a half life of 713 million years. So, once these cats make this stuff, it's around for many turns of the wheels of history. And who knows --

ROSE: Like Council members. (Laughter.)

CARTER: -- yeah, who knows who's hands they'll come into. So, I agree with Gary, it's a -- it's a big problem. But it's not just one problem, it's a complex. Each one of those things I just named is, all by itself, something to keep you up at night.

ROSE: Well, let me ask you a question, though. Again, I keep hearing the Israel angle of this, are you saying that the -- it's Egypt, Saudi Arabia, Syria, Turkey will be more scared of an Iranian bomb than they would be of an Israeli bomb?

CARTER: Scared and jealous -

ROSE: Why would the Iranian --

CARTER: -- scared and jealous -- and jealous too.

(Cross talk.)

ROSE: So, the Iranian bomb would --

CARTER: There's the Shiite bomb, there's the Persian bomb. I mean, all of it's -- it's a pride thing. It's not --

(Cross talk.)

ROSE: So, that would make them take actions that they didn't take in response to the Israeli development of a nuclear capability?

CARTER: Yeah. That was a close-run thing with respect to Israel but, yeah, it would add another weight in the pan. They're always balancing whether to go or not to go, and Israel's in the "go" pan, and this adds another weight in the "go" pan for all of those parties. I think it's quite clear.

ROSE: Okay, let's -- there are lots of things we can get to with that, but let's go back a little bit to the question of how things have gotten to this point. If everyone has -- recognizes what -- if everyone realizes what you're saying and has tried to stop this, why have all the things that we've tried not worked?

CARTER: Well, we haven't tried very much, so --

ROSE: So, we've been sitting around watching all this without actually trying this?

CARTER: Well, I observe -- and Gary knows this much better, and let me just say something and then turn it over to him because he's been thinking about the diplomatic option, doing really good work on that, and has a lot of actual, practical experience negotiating non-proliferation things -- but, to my way of thinking, we have had this policy of tough talk and incongruously weak action for some years now.

And, you know, diplomacy is about carrots and sticks, and the carrots haven't been there because the Russians and the Chinese and the Europeans haven't wanted to wield them. The carrots haven't been there. We haven't wanted to proffer them.

Our administration, near as I can tell, has been divided between a camp that wants to call Iran the "axis of evil," and so forth, and contain or isolate on the one hand; and another camp which would like to "give it a try," to talk them out of it. And we've had the worst of both worlds, where we've gotten the disbenefits of both of those policies -- the benefits of neither. And that's what happens when you have -- you're stymied. And that's just taking them. And then the Europeans, the Russians and the Chinese all have their own issues for why they have been ineffectual.

So, I don't think the experiment's been done, really. It's not that it's been done and failed, it hasn't been tried. Gary made a real interesting point a short time ago, which is, had it been tried in 2003, there's now some evidence that it might have worked. That's the real meaning of the 'ill-starred' NIE, which was otherwise appallingly worded and misleading.

But what it suggested was that in 2003 the Iranian leadership was looking at us invading Iraq -- and a little scared about that, but we seemed to be working with them in Afghanistan, and maybe an accommodation. There seems to be some evidence that had we jumped then we might have been able to talk them out of it. That was then; now is now. They've had the experience of fecklessness, and they probably think we'll huff and puff, but never really blow the house down.

SAMORE: I want to pick up on something Ash said. I think he's right that the Bush administration has tried diplomacy in a half-hearted way, but I also want to emphasize the structural obstacles to an effective international approach, and in particular, the different interests that the big powers have, and this is something the next administration's going to have to grapple with.

For the United States, and for our allies, it's very easy to put nuclear nonproliferation as the top objective -- and that's our principal focus, in terms of both incentives and pressures, but for other countries, whether it's the Europeans, or the Russians and the Chinese, nuclear nonproliferation is the competing interest against other interests they have. And, as a consequence, it's been very hard for the U.S. and its allies to form a coalition that was prepared to take really serious measures against Iran if they -- you know, if they refused to stop their efforts to try to acquire a nuclear weapons capability.

And, in particular, the Russians and the Chinese have been a very weak link in our efforts to try to mobilize U.N. Security Council action -- again, for reasons that make sense if you look at the world from the standpoint of Moscow or Beijing. That's not going to change for the next administration. The Chinese are still going to want to protect access to oil and gas from Iran; the Russians are still going to see Iran as part of the overall effort to balance American power; and we, as we heard this morning, there are all kinds of covert business interests that the Russians -- you know, that the Russian elite is trying to protect.

And I'm afraid the Georgia situation is going to tremendously complicate any efforts for the U.S. to form and effective coalition against Iran. If Georgia doesn't get fixed -- if that, in fact, spreads to a broader conflict with the Russians over Ukraine and other parts of the near abroad, it's really going to leave us on our own -- I mean, the U.S. and its Western, you know, allies without being able to count on the Russians to do much help.

ROSE: So, let me get this straight. It's a real problem. (Laughter.) It needs to be fixed desperately. There's a way we might be able to fix it with a well-calibrated, sophisticatedly deployed package of carrots and sticks. But we're not going to give the carrots, and we're not going to use the sticks, so we're back to square one.

SAMORE: Well, I think the next administration will have a chance to deploy a more effective package of carrots and sticks. And, you know, let me just mention -- on the carrots side, because I think that's a lot easier, as Ash said, the Bush administration has been divided. The Bush administration has supported the international offer to Iran to help their civil nuclear power program if Iran agrees to accept a 10-year moratorium on its enrichment program.

I think that's a very generous offer, and makes perfect sense if the real purpose of Iran's program was nuclear power -- that would be very attractive. Of course, that's not the real purpose of their program. But what the Bush administration has not been willing to do up to now is to throw into the pot U.S. willingness to improve U.S. bilateral relations with Iran -- lifting our bilateral economic sanctions; you know, normalizing political relations; giving some kind of security assurances.

Now, you know, I think those carrots are of mixed appetite for the Iranian regime, but to not have deployed those important instruments on an issue that we all agree is critical importance, that strikes me as a weakness in our position. And I think the next administration, whoever is elected, will be in a position, I hope, to offer to Iran a fresh start, a transformation in the relationship if Iran meets our needs on the nuclear issue.

To me, that part of the formulation is much easier. The harder part is how you back that up. And, ideally, we would want to go to the other big powers and say, we're going to make a much more generous offer to Iran to solve this nuclear issue, but if the Iranians turn down that more generous offer, we're counting on you to support stronger sanctions. And what I'm worried about is this Georgian crisis may have interfered with our ability to line up the Russians and Chinese beforehand to support sanctions if the Iranians refuse a more generous offer.

ROSE: Do you agree with what he said?

CARTER: Yeah, I do. I think it's worth a shot. I wouldn't put a high probability on its success. It needs to be tried. I'd just make two additional points about the diplomatic option. The first is, I'm not an expert on Iran, and I'm humbled by what I hear about this, sort of, "amoeba" that is the Iranian government. And so when you're negotiating with something that is that divided and amorphous, even the best diplomatic setting at the table doesn't guarantee success.

And that's related to the second point, which is, I think it's going to take us a little time, if we were going to try this route -- which, again. I don't put a high probability on its success, but I think we have to try it because you can't go on to the other things unless you've tried diplomacy and shown that diplomacy has failed -- you know, we don't, our government has not interacted with the Iranian government much at all. There was somebody -- Nick Burns, a friend of Gary's and mine, our top diplomat, had the job that Frank Wisner once had -- Frank's here -- said that there was, when he came into office, "half a person" in the State Department who dealt with Iran.

And it reminds me, if I'm a Defense person -- and there's an old story about a letter written to the secretary of the Navy by the MIT Chemistry Department before World War I, and they said, it looks like the field of chemistry is going to be very important in the upcoming war, and we would like to offer the services of the chemists. And the letter back from the secretary of Navy says, you know, thank you for your interest in national defense, and we appreciate your interest, but wish to inform you that the Navy has a chemist; -- (laughter) -- and we have somebody who works on Iran. But it was half a guy. (Laughter.)

So it's going to -- even under the best of circumstances, to figure out how to approach this amoeba would take a little bit of learning and some time and some willingness to probe and interact. And we haven't had that so far.

SAMORE: Could I just add one more thing, because I don't want to leave people too depressed. I do think that the transformation in Iraq could help strengthen our diplomatic position considerably, because the more that the Iraqi government looks stable, the more that it looks like U.S. forces can extricate themselves out of harm's way, the more it will become credible in Tehran that the U.S. would be willing to use military force if diplomacy fails.

Up to now, the Iranians have counted on our predicament in Iraq as protection against a U.S. military attack, because the Iranians could retaliate by stirring up trouble in Iraq by providing arms and, you know, and encouragement to their -- you know, to their allies in Iraq. So, the more that that option is deprived, the more we can credibly threaten the use of military force.

And I'm absolutely convinced, whatever you think about the wisdom of using military force as a last resort, unless the Iranians believe that's a real, serious possibility, I just don't think diplomacy can be effective. That doesn't mean that we should be threatening them publicly, but as they sit and calculate the odds, unless they believe that that's a real danger, I think whatever we put on the table by way of carrots and inducements is not going to be effective.

ROSE: You know, you're not supposed to make threats that you're not prepared to keep, if necessary. So, Ash, you know, this is the kind of thing you do, what exactly are the military options, and if they're so good and worth doing, why not just do them?

CARTER: You know, let me make a distinction first -- and this paper walks through all this, between a military option and military ingredients to real options. I make that distinction between -- because as you see, if you read this, and I'll say why in a moment, military action by itself isn't an option in the sense that it can settle the matter.

It can contribute to resetting the diplomatic table, I suppose you might say, and resetting the registers in Tehran. But it, by itself -- for reasons I'll explain in a moment, doesn't dispose of the Iranian nuclear program. So, you have to ask yourself, after military action -- what? And that's either a return to a diplomatic path, now made more plausible by the fact that you've shown you're willing to whack them; or, or to a strategy of containment.

But there are really just two strategies for dealing with the Iranian nuclear program, which is to talk them out of it; or get used to have them having it and adjust militarily. And so, as we think about military ingredients, of options, there are two options: Stop them -- what's the military ingredient to stopping them?; and contain and deter when they get the bomb -- what are the military ingredients to that?

Let me start with the first --

ROSE: Wait, that's three options, right? There's talk them out of it; there's stop them out of it by force --

CARTER: But, what I'm going to -- about to suggest is that doesn't really work out to be very practical. I mean, so the -- what everybody has in their mind when they talk about ending the nuclear program by military force is, most of the time, is an air strike on Yongbya, and it's now -- I mean, Yongbyon, sorry -- (laughter) -- (inaudible) -- on --

(Cross talk)

CARTER: -- on Natanz. That's more than a Freudian slip, this is analogized to --

SAMORE: (Inaudible.)

CARTER: -- to the Osirak strike by Israel in 1981, and to an air strike which I'd planned in 1994 -- Gary remembers this quite well; he was alternately intrigued and horrified by what we were doing -- (laughter) -- to strike Yongbyon, in North Korea if the North Koreans did not agree to stop, which they ultimately did.

Both of those air strikes would have been more decisive, in technical terms, than would a strike on Natanz. And, if I may take a minute getting --

ROSE: Sure.

CARTER: -- to support and say why, Osirak didn't end the Iraqi nuclear program either. It slowed it down, delayed it; drove it underground and in somewhat different directions. But Saddam Hussein persisted. What ended the nuclear program was, first, Desert Storm; then a decade of sanctions and inspections; and, finally, the conquest of Iraq. That's what ended the -- Osirak did not. Osirak gave time for the work -- for history to overtake Saddam Hussein's regime. So, it wasn't -- Osirak bought the time for other things. Osirak didn't end Saddam Hussein's nuclear program.

If we had done Yongbyon in 1994 -- what we were going to do was strike an operating reactor that had those fuel rods, that now, to my total dismay, another incompetence on our part, has committed -- the North Koreans have now turned into bombs. But, those fuel rods were, at that time, in an operating reactor. And it's not a trivial matter to take out an operating reactor, because you can create a little Chernobyl, and we were quite confident that we knew that we were going to be able to do that. That would have entombed those fuel rods in the rubble of a reactor. We would have taken out the reprocessing facility, the fuel fabrication facility, the other reactors under construction, sort of, everything associated with the North Korean nuclear program. And so what would the North Koreans had to do? They had to go dig this dirty stuff out of the rubble; rebuild a reprocessing facility; rebuild the reactors and start all over again. Now, they could have done that, but it would have taken some time.

Let's look at -- let's think about Natanz for a moment, what's going on in Natanz. In Natanz there are these centrifuges spinning, 3,000 of which, operated in the right way, for a year, to make a bomb's worth -- that is 25 kilograms of highly enriched uranium. And we could get rid of it in a night. I mean, the United States -- this paper goes through how we'd do it. The Israelis a little bit lighter, but also could probably do it. So, we could destroy that facility.

And if you believe, as most people do, that there are other parts of the Iranian nuclear program that are not at Natanz -- and probably parts we don't know about, but that Natanz is the fastest route for them to a bomb, then destroying Natanz will slow down them in getting to a bomb. By how much? A good reckoning might be maybe two years, or something like that, because what -- they have clearly thought about this, and they have the ingredients of a reconstituted program hidden somewhere else. And so they'll -- they'll start again.

So, you have to think about two scenarios here: One is the scenario that the NIE plays out, in which they're really after the bomb but they're going to play "cat and mouse" with us; and they're pretending only to lightly enrich, and just a little bit, and then they're going to get up to the point where they can quickly break out and enrich, and make a bomb's worth. That's path one; that's the path we're on now -- and, what people say, maybe five years or so and they'll get there, or some number of years, it's all a guess, or an estimate. The other path is we bomb them; they rebuild. And then, of course, all bets are off. They're not going to play "cat and mouse;" they're not going to be letting inspectors in; they're not going to -- you know, they're going to race.

Those two paths only differ by a couple of years, in terms of when they get the bomb. Said differently, a single strike by itself buys you a couple of years but doesn't dispose of the matter. So, how could you dispose of the matter? Well, you only dispose of the matter if that air strike slows them down long enough for something else to happen -- which is us to carry out the diplomacy, having shown that we're willing to use force; that diplomacy succeeding in ultimately ending the program. Or, you have to go back again and again, every time you find them. And you're talking about going back every year or every two years -- if you find what they're doing.

So, that's the sense in which bombing them now is not an option, in the sense that it ends the story. It begins a new chapter in the story, and you still have in front of you, fundamentally, two options, which is: talk them out of it, and get over it. You've changed the terms of talking them out of it, perhaps, by showing your willingness to bomb -- you've bought some extra time for diplomacy to work, but you're still fundamentally pursuing a diplomatic path.

Unless you go to option three, which is to invade the place. And let me just quickly say here that, you've got to remember, this place has, you know -- what, four times the number of people, and three times the land area of Iraq. And, we've just had the experience of conquering and governing big places in the Middle East, and there doesn't seem to be a huge appetite for that On top of which, even though we've had plans for the invasion of Iran as long as I've been associated with Defense, we don't have the ground forces now to do it.

ROSE: What makes you think that the response to an American, or an Israeli air strike would be limited to rebuilding the program, or coming --

CARTER: Oh, it wouldn't. It wouldn't. I've given you the pro, which is that you get a -- buy yourself a couple years. The cons are, (laughs) I think, quite large. They'll retaliate -- no kidding, they'll take action through proxies, and so forth. They'll try to disrupt Gulf shipping -- I don't think they'll succeed in doing that for long but, at any rate, they'll retaliate. That's number one.

Number two, there's every chance that using military action under the -- in the wrong way will not reset the diplomatic table, it will turn over the diplomatic table. That is, it will be a one-way exit from diplomacy, because the Russians, the Chinese and the Europeans are going to say, well, to hell with you, we're not -- you know, we're not on this train anymore. And we can't do a lot without them, just because we don't have the sticks without them.

And the third thing it would do is turn a generation of Iranians against the United States. And that's unfortunate because, as near as I can tell -- I'm willing to be corrected, the Iranian people are not anti-American, certainly not by the standards of much of the rest of the world with the current historical -- (laughter) -- and this is according to polling data, and so, and so forth. And, you know, you piss them off for a generation -- the way they did us when they took our hostages.

And so you're buying yourself, again, kind of a one-way street from diplomacy, and a one-way street from any hope of reconciliation with the Iranians as a people by taking this action. So, I, myself judge the pro is buying a couple of years, but it's even dodgy at that. That's not real appealing, in terms of a benefit. And the disbenefits are quite large. So I think the balance weighs against military action at this time in a sort of diplomatic vacuum. And I think that's the judgment that our government has made.

ROSE: Okay, so the military sticks aren't really there. The diplomatic and economic sticks are in the hands of other major powers that aren't interested in using them, and therefore they aren't really there. And the diplomatic, economic and other kinds of carrots are not going to be deployed by any U.S. administration that you know of, or at least it hasn't been.

So why do you guys -- to go back to what you were saying before, why do you think there is some real hope that a newfangled carrot-and-stick initiative might work? As George Kennan used to say -- (speaks phrase in foreign language) -- "Why is this time going to be different than all the previous times?" (Laughter.)

SAMORE: Well, look, I think it probably won't be. But I think the next administration has to make that effort before Iran reaches the point where they have a credible breakout capability. And the good news, again, just to not leave you all too depressed, is that even though Iran has been trying over the last two and a half years to move ahead as quickly as they can in their enrichment program, they're encountering enough technical difficulties.

We've made it harder, through export controls and sabotage and other, you know, actions so that we've complicated their program. It's still a very rudimentary capability. They've got 4,000 centrifuge machines that are spinning very inefficiently. They're producing about one to two kilograms of low-enriched uranium a day, which is very, very marginal capacity.

And, you know, I think we do have at least a couple of years before they reach the point that they would feel confident they could break out in a short enough period of time, as to say produce enough highly enriched uranium for a couple of bombs in a short enough period where we would not have the opportunity to attack them, because where I think -- I mean, Ash is absolutely right about the pros and cons of a military strike that is, you know, what I would call a preventive strike, a strike against a facility which is under IAEA safeguards, which is producing low-enriched uranium, which is ostensibly a peaceful facility. There are a lot of negatives.

However, think about a scenario. There are two other scenarios where military force might be used. One is a breakout scenario. Let's say that the -- which is sort of like the North Korean scenario we were looking at. Let's say Iran kicks the IAEA inspectors out of their enrichment facility. That's a pretty good indication that they're now trying to break out; they're now trying to convert that facility from the production of low-enriched uranium to the production of weapons-grade uranium.

And in the period of time it will take for them to produce a couple of bombs' worth -- which could mean, depending upon the size of this facility, could be a couple of months -- I think a military strike against that facility in that window is much easier to justify, you know, internationally and domestically.

The second scenario, which we've seen very recently, is the Syrian scenario, where the Israelis bombed a secret nuclear facility. And again, the international reaction to that was marginal, and it didn't in any way interfere with subsequent peace talks between Israel and Syria. So if we were to identify a secret facility, you know, in Iran, or if we or the Israelis or someone took military force against that, again, I think that's much easier to argue in favor of.

So, you know, to me the military options -- we shouldn't just look at the most difficult case, which is a preventive strike against an ostensibly peaceful facility. We also want the Iranians to believe that if they actually try to make nuclear weapons, or if they build secret facilities that we detect, they run the risk of being attacked.

CARTER: I agree with that, but I just need to say something about that so you don't misinterpret. Everything that Gary says is absolutely right. There are circumstances -- I don't mean to say military action is not advisable under all circumstances. I'm saying there's no military option that settles the matter, including the two that he just adduced.

You're still back to the issue of what do you do about the Iranians if they want to get the bomb, and you either keep bombing them or you keep talking to them. And you may have reset the terms by taking military action, but you're not out of that dilemma entirely. That's my only point about saying it's not an option. I think it's an appropriate part of a coercive diplomatic strategy.

Point two is military action -- I think Gary would readily agree to this -- in a diplomatic vacuum -- that is, without a strategy and without an idea of where it leads -- is the worst of all possible worlds, because it doesn't achieve much and you get all the blow-back.

So if we're going to do this, we have to set the terms so that it is in a diplomatic context and it's clearly the consequence of the Iranians' failure to accept reasonable diplomacy. Then it might be advantageous to not only threaten to do it but to do it. But in the current circumstances, where that context isn't there, you get the small technical advantage and all of the disadvantages.

ROSE: Could the Israelis do it if we didn't want them to?

SAMORE: I would say yes.

ROSE: Even if we refused to give them the codes?

CARTER: Well, they don't have to fly over air space that we control. They can fly over Turkey. They can fly over Saudi Arabia. There's even some reports that they might have had some discussions with the Georgians, to use Georgian airfields.

There are four routes, at least, for Israel. Israel -- it's not as good as if we do it because the scale available to them is not as great. I think they can do it. I think they can do it without the complicity in advance of anyone, including ourselves. By "do it," I mean do the Natanz. They can't do anything as extensive as we could do.

It's gone through in this paper how they do the refueling and so forth. And for them, the regrets are less, because they don't have to worry about turning the Iranian population against them. The Iranian population is already against them. They don't have to worry about upsetting a delicate multilateral diplomacy that they're involved in, because they're not.

ROSE: Isn't that precisely the point, which is, isn't there a moral hazard issue here, which is if the Israelis have less incentive to worry about the consequences and perhaps more incentive to favor a short-term setback, aren't there things --

CARTER: They're more likely to do it than we are. I've said that between our elections and the inauguration of our president, I'd put 50-50 the Israelis to do that.

ROSE: And if the U.S. government decided that it was not a worthwhile thing to do, there is nothing it could do to prevent the Israelis from doing it? Is that what you're telling me?

SAMORE: No, I don't think that's what Ash is saying. We can certainly try to discourage the Israelis. And, in fact, there's some evidence that this administration has been doing just that; that in June and July, when, you know, there were reports of Israeli practice runs over the Mediterranean and when there were public statements being made that were very belligerent, as I understand it, the U.S. government has tried very hard to argue with the Israelis that this is not the right time, not to say never, but that right now would not be an appropriate time to launch an attack.

And I think one of the difficulties we have in our diplomatic strategy is that, on one hand -- and I think you mentioned this, Gideon -- we want the Iranians to believe that the military force is a real option, but we also have to be very aware, as Ash has pointed out, of all the limitations and the risks that we run.

So how you use that instrument as a political instrument without, you know, inadvertently making it more likely that it's used when we don't actually want it to be used is a tricky balance.

ROSE: So the Israelis are our madman theory.

SAMORE: Well, yeah, I mean, in theory, you'd like to do that. But I think --

ROSE: Don't ask us, because who knows what the Israelis might do.

SAMORE: We will certainly make that argument, and I think it's a credible argument, for all the reasons that Ash has pointed out. The Israelis are much more sensitive to the risk of Iran having a nuclear capability and genuinely see that as an existential threat, which it isn't to the United States. And the Israelis are much less sensitive to the possible consequences and blow-back.

So it's a good diplomatic instrument. But we have to be careful when we use that instrument that the Israelis don't see that as a green light to go ahead and strike, you know, before we're ready to have that actually happen.

CARTER: There's another layer of this too. It's absolutely right. And the green light is not only to the Israelis, but if we are seen to have given a green light, then we get all the negative consequences as though we had done it ourselves. And so if everybody's going to think we did it, we might as well just do it, because we'll do a better job. But there isn't a soul east of Morocco who won't think we didn't have something to do with it if the Israelis do it. That's the dilemma for us.

ROSE: I used to think that we were the great (power patron ?) in this relationship, but I guess not. (Laughter.)

Okay, let's turn it over to you guys. Herb Levin.

QUESTIONER: Last night, after McCain finished, I had a lot of reading to do, so I left it on. And I got all of these people talking up there at the convention who I had never heard of before, will never hear of again, and they were all reading things that had been supplied to them, obviously, by the brain trust of the Republican Party.

And there was a theme, and the theme was that McCain would never compromise with evil. He would never sit down with evildoers. He would never compromise. And we must absolutely elect him and stand firm, because these other guys, they believe you can work things out with people who are fundamentally evil. And we're going to have 40 votes in the Senate. We can block anything serious, and that's really what we must work for.

So I thought that those who do not believe in negotiations in the past eight years have been a little bit restrained when the president wanted to negotiate, but they will have no restraints, should there be a Democratic administration. And this was well-coordinated. You guys all had gone to bed. But you certainly shouldn't talk to the Iranians, for many reasons. And there are even people who wanted to push over Burma, who wanted to talk to the Cubans. The North Korea negotiations had been a disaster. And, of course, people wanted to sell out Taiwan to the Chinese.

And I thought, where do you get support? You've talked about the failures, potential failures, pitfalls, of violence. Where are you going to get support for a serious diplomatic strategy? And when you have the Democrats apparently willing to support Bush's initiative to have the Indians build more nuclear weapons and test them with our blessing, under that argument, where is support for the kind of strategy that you're talking about, and what is the strategy?

ROSE: Try to keep your answers shorter than the question. (Laughter.)

SAMORE: Well, you know, I think what candidates say during the election is not necessarily a good guide to what they'll do once they're in office. I know this is a shock to you. And I -- you know, I mean, I always believe that at the end of the day, the U.S. government tries to do the most sensible thing.

So I think there's a pretty good chance that whoever is elected will try something like the kind of diplomatic strategy we've talked about, which frankly is building on the current strategy. I mean, if you ask the Bush administration what's their diplomatic strategy, it's carrots and sticks. It's the use of inducements, threats, intimidation, persuasion; I mean, all the instruments that we normally use in diplomacy. It's just that they haven't done it very efficiently.

And the obvious approach, since we're nearing a point where it would be too late for diplomatic action to be effective in stopping Iran's program, the obvious approach is to try to enhance that package with better carrots and more threatening sticks.

So I actually think that an Obama administration and a McCain administration is likely to pursue a very similar strategy, which will seek to build on the current approach and try to fine-tune it in a way that makes it more effective. As we've all said, it may very well not work, and then the next president will face a very difficult choice between either accepting that Iran will have a breakout capability and hoping to erect barriers to prevent them from actually making nuclear weapons, or taking military action with all the risks and -- (inaudible) -- we've talked about.

CARTER: Can I just say something about that? I hope you're right. John McCain, at least judging from what he said about Iran, but also about North Korea, really does believe that talking with evil is -- and I respect that point of view; I have a different point of view, which is I have the same feeling about North Korea, which is I think it's more evil to let them get nuclear weapons than to try to deal with them.

I wish that North Korea had a different government. Its people deserve a better one. I wish Iran had a different government. But I don't know how to change it. And it looks to me like they're going to have that government long enough to get the bomb. And so talking about changing the regime really doesn't answer the question, which is, "What are you going to do about nuclear weapons?"

So I hear this, "I don't like to talk to evil people," and so forth, and I certainly respect that point of view. But my answer to that is, what's the second sentence in that paragraph? What are you going to do about the bomb? Is what you're saying you're just going to let them get it? That's really what I infer from a statement like that is that we will let Iran get the bomb and then we'll figure out what we do after that.

That, to me, is too dangerous a path. And I'm willing to try something else, even dealing with people whom I wish weren't governing the country they are in order to head that off. I just don't think that that's an analytically sound -- it's a stance, but it's not a policy.

ROSE: We've got a pair of questions. We'll get as many as possible. Please keep them succinct. Over here -- Alan Gerson and Frank Wisner.

QUESTIONER: Alan Gerson.

Ashton, you said that the odds of an Israeli strike before January are about 50-50. And you also said that even if Israel were to strike, if I understood you correctly, without U.S. authorization or an amber light, it would be perceived, certainly by the Iranians and the rest of the world, that the United States did provide such authorization.

Given that, would you venture another calculation as to what the odds are that the United States would feel compelled to come in and finish the job if the Israelis began it?

ROSE: And Frank.

QUESTIONER: I wanted to tell both of you how much I've appreciated what you've said today and the analysis you've brought, the arguments you've advanced for a case of engagement, which I'd like to think is the only rational way forward.

At the same time, I'd like to add a thought that flows from your arguments, and that is, treating the nuclear issue as separate from the overall question of our strategy towards Iran will undermine our capability to deal with the nuclear issue.

But once we do turn to the nuclear issue, I would argue, as part of the whole, have you all looked at, thought about the consequences of the arguments advanced by Bill Luers, Tom Pickering and Dr. Walsh regarding a deal that would end up with Iranian enrichment capability inside Iran but under international supervision and international and Iranian mixed ownership? Does that have a space in your logic as a way through this otherwise extremely difficult puzzle?

ROSE: Either one of you?

SAMORE:

CARTER: Well, I mean, you asked a good question, and I suggested that myself. If you thought the Israelis were going to do it and you were going to suffer -- we were going to suffer most of the blow-back anyway, we would do a more competent job carrying it out ourselves. So there's a certain logic to that.

Your question was, do I see that logic prevailing? No. I don't look -- and this is tea-leaf reading, so I don't know; I'm not in the administration. But I see the administration having done the analysis I did, which suggests that this doesn't get you a whole lot under the current circumstances. And if you're going to do it, you want to do it in the right circumstances, number one.

And number two, I see the lineup of the personalities of the administration. I mean, it was different when Don Rumsfeld was there and Dick Cheney and they had a kind of tag-team relationship. Bob Gates, Mike Mullen, the chairman -- I mean, if you listen to what they've been saying, they've been more or less saying, "We've got our hands full and would rather not get into this kind of thing." Condi Rice is trying to end her term on a negotiating note instead of a bombing note. That seems quite clear.

So I don't see -- you know, the decider can still decide to do whatever he wants, but there is around him a group of people whom I think will be suggesting that this is a good idea. So both for the reasons that it doesn't seem analytically to make a lot of sense and because of the current constellation of personalities and where they seem to be at, I don't see the United States -- (inaudible). So I would not -- I tell people I see the odds of us doing it before the end of the Bush term as very small. I put the odds of the Israelis doing it between the election and the inauguration considerably higher.

SAMORE: Well, I think Ambassador Wisner is absolutely right that we can't address the nuclear issue in isolation. We have to figure out a way to address it in the context of all the other issues that we have on the table with Iran. Now, unfortunately, that means both issues where we might have common interests, but also a lot of interests where we have different interests, including support for Hezbollah and Hamas and support for the peace process and regional security arrangements and other issues. So even though that complicates the situation, I think it's important that when we approach Iran, it has to be in the context of trying to deal with the overall relationship.

On the second question, Ambassador Wisner asked about the idea of an international enrichment facility located on Iranian soil. Well, that's what the Iranians are proposing, although they haven't been very precise about exactly what that would look like in terms of international ownership and participation.

From my standpoint, that's a pretty undesirable outcome, because I think it gives Iran what they want. I think it gives them a base of capacity to produce nuclear weapons, and they could use that kind of international facility in two ways. First of all, they could nationalize it and actually produce weapons-grade uranium at that facility, and we would have helped them or we would have participated in the construction and operation of that facility. So I think we would look pretty foolish in that case. And, of course, there's a history in Iran of nationalizing industry, so this is not unprecedented.

But secondly, I think much more likely, if they had a huge facility on their soil, that would mean training a lot of people. That would mean producing a lot of components and materials to run that facility. And I think that creates many more opportunities for them to build a covert facility and break out in a way where there wouldn't be any warning.

Now, the argument in favor of an international facility is that we would have people or there would be people from western countries on the ground in that facility, and therefore we would be in a better position to keep tabs.

I think that's true, but to me that advantage is outweighed by the opportunities it creates for Iran to cheat. And I think we have to recognize, in a realistic way, that any agreement where you're talking about obstacles to diplomacy, and just as with the North Koreans, you have to assume that any deal we make with the Iranians, there's a pretty high risk that they will cheat on it. And certainly their record of cheating on the NPT can't give us much confidence that they would actually abide by any agreement. So we have to keep in mind the importance of verification.

So to me, the sort of international, you know, multilateral facility in Iran, I think you could probably negotiate that since that's what the Iranians are proposing. But I don't think that's a diplomatic outcome that would give us much happiness.

ROSE: Gary Sick back here, and over here.

QUESTIONER: (Off mike) -- Israel can bomb Iran, and the United States will not be held responsible for it and that the retaliation against us, we can just sit there on our hands and do nothing. If it's 50-50 that they attack, it's 50-50 that we go to war. And I don't believe it, frankly. But my question is, Gary has been very careful of always saying a nuclear capability, and Ash has just said bomb.

Is this a distinction without a difference? I mean, having a nuclear capability is different than having a bomb? What is the difference, and what is actually --

SAMORE: Yeah, yeah --

ROSE: We're pairing them. We're pairing them.

SAMORE: I'm sorry.

ROSE: Over here.

QUESTIONER: (Off mike.)

ROSE: Hold on a second. Wait for the microphone, please.

QUESTIONER: I guess what I'd like some clarification on is the question of Israel and the role Israel could play in a military strike on Iran. The way that I've understood you guys talking is that the only deterrent to Israel bombing is the U.S. pressure for it not to.

And what I'm wondering is, is there any other deterrent in terms of, you know, the possibility of blow-back from Hezbollah, Syria, Hamas, the various complements of what Israel is going through right now? Is that a deterrent at all? Does that play a role? Is it a question of America holding back Israel at some point either letting it go or Israel becoming sort of the tail that wags the dog in this situation? If you could sort of explain that, I think it would help in understanding the 50-50 situation that you brought up.

SAMORE: Well, let me start. You know, perhaps I should -- you know, I made this distinction more clear earlier. You know, I think there's a big difference between a capability and the bomb. And what the Iranians claim they're seeking is a capability. Of course, they say that program is purely peaceful, intended to produce low-enriched uranium for nuclear power reactor fuel.

But privately, I've had Iranian officials say that they live in a dangerous neighborhood; they're surrounded by countries with nuclear weapons, including India, Pakistan, Israel, Russia, and the U.S. is there, and they need to have an option. They need to have -- for their own survival and security, they need to have the ability in extremis to build nuclear weapons. And that means they need to be able to produce fissile material, either enriched uranium or separated plutonium. And if they build a large -- you know, if they build a large enrichment facility, that will inherently give them the option of converting and using that facility for the production of weapons-grade uranium.

Now, they say they would never actually build nuclear weapons, because they know that would scare the neighbors and it could risk war, you know, and it could cause a nuclear arms race in the region. So sort of the Iranian position is, "We'll be content with a latent capability, with a breakout option, but we'll never actually use it." I don't believe that. I mean, I think once the option is available, at some point the temptation to actually have real nuclear weapons on missiles will be so overwhelming that it can't be resisted.

And we've seen other countries that have made similar arguments. I mean, India, for example, for many years argued, "We don't want nuclear weapons, but for our status and our sort of protection in extremis, we need to have the option to build nuclear weapons." But eventually the desire or need, perceived need, to have the actual bomb became overwhelming. And I think in the case of Iran, my guess is a similar process would take place.

CARTER: I agree with that. He just uses -- he explains things better than I do. (Laughs.) It's the only thing I'd say about it.

Your point is a -- I mean, it's not just that they would be putting their best ally in a really tough spot, as Gary says, that deters the Israelis. I mean, they can do the math as well. They know that this doesn't end the story. They know that there would be retaliation against them. So again, taking out Natanz isn't the end of the story for anybody. And the Israelis know that that's true for them, as well as for us.

So I think there are many things that go into their calculus, but presumably one of them is, if we're right that our government has been suggesting that this would be an unwelcome development for the United States because it would immediately embroil us in something we didn't instigate, hadn't thought through and hadn't positioned ourselves to withstand, that's an unfriendly situation to be in. But I think there are other things as well that go into that calculus. But the balance is not as sharp as it is for us, which is why I'm wondering whether they won't, in fact, decide that the balance is in favor.

ROSE: I really find you guys astonishingly cavalier about this, I mean, given the extraordinary leverage, potential leverage we have vis-a-vis Israel. Any U.S. administration that decided it was not prudent to strike Iran and allowed Israel to do so anyway would be guilty, in my opinion, of a gross malfeasance in the advancement and securement of the American national interest. I cannot imagine that taking place if we truly used the leverage in advance to make that clear. It's not something that would be an unfriendly act. It would be getting into a war that we had chosen not to start. But that's just my take.

I'm curious here -- we have several who want to get into this. Over here, and then back there.

CARTER: You can't let that stand. Cavalier, Gary was not. Gary made the point earlier that it may be a dangerous game, but the game in which the Iranians wonder whether the Israelis are going to do something has some value. So you've got two audiences out there. You've got the Iranians, whom you might wish to think this might happen, and the Israelis, whom you might wish to think this would not be such a good idea. And that's a sporty game to play, but it's not an unreasonable game to play. So I --

ROSE: But that's using Israel as a threat. I thought you said -- you said you thought there was a 50-50 chance that there would be an Israeli strike.

CARTER: Yeah.

SAMORE: You know, I think that we may not have an opportunity to use our full leverage to dissuade Israel. If we decide that we think an Israeli attack is not in the American interest, I think it will happen in a way so that we will not have the kind of advance warning that would allow us to take effective action.

So you lay the cards out now. "Here's what will happen if you do this when we say, 'Don't do it.'" But, you know, as I say, I don't think the U.S. government wants to act in a way that precludes the threat, because we're using the threat as a political instrument.

CARTER: And that's what I'm afraid gets misplayed.

ROSE: You're going to get a chance next session, so over here and then back there.

QUESTIONER: (Name inaudible) -- Council on Foreign Relations.

Being an Iranian myself, and having spoken to countless Iranian diplomats and former Iranian candidates for presidency and Iranian dissidents here, there is a current denominator, common denominator, for the argument of carrots and sticks, and that is that the Iranians want America to recognize Iran.

There is an element of recognition that's very, very important to the Iranian people, whether they're here, whether they're in Iran. And I wanted both panelists to please shed some light on this. To what extent do we see this happening? Is this a viable carrot, and do you see this as a lever to change this game in our favor? Thank you.

ROSE: And then back here.

QUESTIONER: Jim Dingman, INN World Report.

One could argue that in the spring to the end of 2003, the Iranian Revolutionary Guard Corps and the political assets that had been built up for 15, 16 years were deployed to Iraq to aid and abet those who were coming up and upsurging in the crazy environment of that time.

I want you to specifically talk about what you think would happen in Iraq and Afghanistan if, whether the Israelis did this unilaterally or we did it unilaterally, we attacked their nuclear facilities. What would happen on the ground in both those situations, in your minds?

SAMORE: Well, let me first comment on the psychological element of engagement. I do think it's important for the Iranian public to feel a sense of respect and recognition from the United States. And I think that's a relatively easy, you know, price for the U.S. to pay, although sometimes I wonder, when the Iranians talk about recognition of their importance and respect, I often wonder how they translate that into real terms.

I mean, sometimes when the Iranians talk about, you know, recognition of their status as a leading power in the region, that means that the U.S. can't have any military bases in the Persian Gulf, which is a nonstarter. So I think it's important that -- you know, it's very easy I think to convey respect but sometimes that is used by the Iranians as a subtle way of getting at much more important issues, and that's something that you can only tease out in the course of diplomacy, which is why it's important to talk to them and find out what it means.

You know, in the case of Iraq and Afghanistan, what would the consequence be, I think it's very difficult to anticipate, but what I was trying to say earlier is that the situation we face in Iraq now appears to be more impervious to Iranian retaliation and the consequences in the street in terms of a threat to the Iraqi government. I mean, presumably, the Iraqi government would disown any support for a U.S. or Israeli military attack because it would obviously -- at least with much of the Iraqi population it wouldn't be popular. With some of the Iraqi population, the Sunnis much actually be quite happy, quietly.

You know, so I think that we're at, you know, I guess the general thing I would say is the better things look in Iraq and Afghanistan in terms of U.S. forces not being in harm's way, and the more stable those governments look, the less opportunities and options the Iranians would have to retaliate. They'll clearly try to retaliate through proxies and allies in both places, but part of the balance of power is the extent to which we appear to be in a position, you know, to, you know, to withstand whatever retaliation they can take in response to an attack.

CARTER: Can I just say something?

SAMORE: Sure.

CARTER: First, I thought that was absolutely a good answer to the second question, there will be consequences in Iraq and Afghanistan, I should have mentioned that earlier. But you raised something that's very, very important and Frank Wisner does as well which is whether there's a possibility of a diplomatic breakthrough that is more comprehensive than one just dealing with the nuclear question. You could say it differently which is can you even hope to have an agreement with Iran that is isolated to the nuclear, or would it have to be some broader kind of accommodation?

You know, we're used to arms control with the Soviet Union, and the premise of arms control in the Soviet Union was we're going to talk about weapons and everything else is going to stay the same. You know, we're still a cold war, we're still antagonists but we're going to deal with this little problem together. And that worked. That was more or less the way it was done with North Korea under the agreed framework. We hate you, you hate us, we're not going to trade with you, we're not going to relax any other kind of pressure on you, keep you on the terrorist list that trade with the enemy, this was back in 1994, but we're going to make this little deal about nuclear -- this one little issue about nuclear weapons. That's type A of agreements.

Type B is where there's a general relaxation of pressure by the West against Iran in return for a comprehensive change in conduct on behalf, that's a bigger deal. Frank's raising that prospect, can you have the former in this case without the latter, or can you imagine a circumstance where the cold war essentially with us and Iran continues but we make a deal about this little thing called the nuclear program. I don't know whether the little one is possible without the big one, and if it's not possible without the big one and you can hardly imagine the circumstances in which the big one gets done, then that turns you into a pessimist about diplomacy.

ROSE: Okay. We're going to have one final batch of three. Over here, over there and back there.

QSince Iran is aware of the Israelis' threat too, the hour after Israel bombs Iran, then who bombs Israel on behalf of Iran, and where does Condi Rice first go? (Laughter.)

QGiven the persistency of the level of threats by the Iranians, are the Israeli's correct in your judgment, that this is an existential threat to them?

ROSE: And back there.

QJust going back to the question of making a bigger deal than the nuclear issue, is there a medium alternative or middle alternative to all this situation, the possibility of making a deal on the nuclear issue because nuclear issue is so important, and then putting on the table important concessions on the part of the United States, including -- and I want to be concrete -- full diplomatic relationships, the possibility of lifting sanctions while leaving some other issues that the United States and Iran have difficulties with on the table?

ROSE: Those three plus any final comments you might have. And one little addition which is if it is an existential threat, is it different from the one that the United States lived through for half a century during the cold war?

SAMORE: Right. Do you want me to --

CARTER: Sure, go ahead.

SAMORE: Well let me say first of all I think, you know, I completely agree that in pursuit of a nuclear deal, we should be prepared to put on the table the offer of improving, you know, our bilateral relations which would include lifting economic sanctions, normalizing political relations and so forth. Now the argument against that which the Bush administration has used is that once you play those chips, that weakens your hand to deal with all the other problems we have, whether it's support for Hezbollah or opposition to the peace process or you know whatever and I think that's true, it's a valid argument.

But for me the nuclear issue is so important, that I'd be willing to play those chips or at least see whether that would work. Maybe it won't, but I think you've got to make a decision how you use the cards in your hand, and I'd be prepared to use them.

You know, on the existential threat, I'm very sympathetic with Israel's belief that it's an existential threat. And, you know when you talk to Israeli strategists, I think it's very unlikely that Iran is going to wake up one morning and decide to destroy Israel by using nuclear weapons because the Iranians understand that Israel can retaliate in a way that would destroy Iran. But they believe that there's a small possibility, whether it's escalation, accidental use, miscalculation, diversion, plus the fact that Iran would act much more aggressively if it had nuclear weapons, but that isn't -- poses an existential threat to Israel. And given Israel's history, I think there's a tremendous sensitivity to the possibility that the entire population could be destroyed.

So I completely understand why Israel views it that way. It's not I think quite the same as the U.S. and the Soviet Union, you know, and therefore I think it's, you know, completely understandable why they would be much more willing than other countries to use military force in order to try to prevent that threat.

And, you know, I've also heard Israelis say that, you know, they wouldn't be so worried about, you know, Iran having nuclear weapons if there was a different government, so it -- I mean, a different government in Iran. So it's not the mere fact of Iran having nuclear weapons, it's the fact that it's seen as such a hostile government.

Was there one more question? Oh, yes, about -- you know, the Israeli calculation is that Iran's ability to retaliate against Israel will be limited, both by choice and by necessity, that Iran is not likely to, you know, shoot missiles at Israel because Israel can retaliate and the retaliation's likely to take the form of action through proxy. And the Israelis think they're prepared to withstand that and deal with it.

ROSE: And any final thoughts?

CARTER: Well, I said it at the beginning, it's not just use, its use, possession and diversion. We didn't worry about diversion from the Soviet Union, we have about Russia, I ran the Nunn-Lugar appropriation -- (inaudible) -- and you heard a lot about it after the fall but -- and it followed a state you didn't worry about use control.

And Russia -- and as far as leading to further proliferation, you know, Russia became our partner in stopping further proliferation. So this is, you know, different and more dangerous and I take it very seriously. You know, you can't say you can't live with something that you may have to live with and I have in this paper what we all have to do if Iran gets the bomb, but it's really a very unfortunate circumstance.

We already have that with North Korea, we've seen that in the last seven years, we're going to look back and very deeply regret that, just as we look back now -- I don't know how you feel, but I'd do anything to be able to turn back the clock and stop Pakistan from having a bomb because under the current circumstances, that is a huge worry.

What's down the road for Iran? As I said, it's the half life 713 million years for plutonium, 24,400 years? I mean, you know, the supreme leader ain't going to be around that long. (Laughter.) It'll be somebody else who has this. And so you're creating -- you're casting a shadow over humanity for a very long time every time a bomb is introduced to the world. And it's not that, you know, we're better people than the Iranian people are in some fundamental sense. But every time you put one of these things out there, you're creating a lasting danger.

ROSE: Well, on that cheerful note, we will -- (laughter) -- kick the can to the next session to how to actually resolve it all and we'll see you back here in 15 minutes.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

More on this topic

Filmmakers and experts discuss the HBO documentary For Neda, which illuminates the larger story of political struggle in Iran by focusing on the life of Neda Agha-Soltan, the woman whose death during last year’s protests drew international attention.

Author and journalist Hooman Majd, and Iran scholar Mohsen Milani discuss about the Iranian presidential election, the political future of the country, and the impact on U.S. foreign policy.

Terms of Use: I understand that I may access this audio and/or video file solely for my personal use. Any other use of the file and its content, including display, distribution, reproduction, or alteration in any form for any purpose, whether commercial, non commercial, educational, or promotional, is expressly prohibited without the written permission of the copyright owner, the Council on Foreign Relations. For more information, write publications@cfr.org.